Hello, everybody. So, it has been said that you are what you eat. Maybe. But it is certainly true that a society is what it believes. And, as a society, some of our most closely held economic beliefs, the beliefs that frame our politics, our policy, and our culture, are wrong—and, worse, they’re pretty terrible for us. Because it turns out that virtually all of the conventional economic assumptions we have made these last decades—what we teach in our schools about how human economies work—are objectively, scientifically false. Our behavior model, our systems model, our theories of value and growth. For example, we believed in a behavioral model that holds that people are homo economicus—perfectly selfish and relentlessly self-maximizing. It’s not true. We can be selfish, of course, but decades of science reveals that humans have evolved to be innately moral, reciprocal, and cooperative. What makes us unique isn’t our competitiveness. All animals compete. It is our unmatched capacity to cooperate at scale, which has enabled our species to dominate the planet. We believed that the economy is an equilibrium system within which, if one thing, like wages, goes up, another thing, like jobs, must come down. It’s not true. The economy is an ecology—a complex, adaptive, increasing-return system where when wages rise, for example, so do jobs. Believing that when wages grow, jobs shrink fundamentally mischaracterizes the economic dynamics in these systems, in the same way as if you believed that when plants grew, animals shrink. This is not how the system works. There is no equilibrium in an economy. We believed that price equals value, and that people are always paid their marginal product, exactly what they are worth. It’s not true. Price sometimes equals value, but, please take it from a successful capitalist— we never ever pay people what they are worth. We pay them what they have the power to negotiate. And, for sure, we never pay ourselves what we are worth. We pay ourselves as much as we can get away with. [laughter] We believed that the availability of concentrated capital was the principal constraint on economic growth. It’s not true. The economy isn’t money. It’s people. And the more people we fully include in the economy as innovators, entrepreneurs, well-paid and well-educated workers, and robust consumers, the faster and more prosperous the economy grows. Why does it matter that all these academic assumptions are wrong? Because they logically and inevitably lead to a higher-level set of heuristics that has shredded our economy and our democracy over these last decades. Heuristics like, raising wages kills jobs. Tax cuts for the rich create growth. Government is always inefficient. The market is a perfect meritocracy. Greed is good. The rich are makers. The poor are takers. And there is always a trade-off between increasing amounts of economic fairness and justice and economic growth and efficiency. So here’s the thing—there’s a Nobel Prize in economics attached to every single one of those ideas. And they are all wrong. Because here’s the thing— if you accept these neoliberal assumptions, the truth is there is only one economic outcome that is possible. The rich will get richer and everyone else will get poorer. Orthodox economics and neoliberalism have presented itself as science—as immutable, timeless truth. That is a lie. That is a lie. It is weaponized pseudoscience. Neoliberalism is a protection racket for the rich and the powerful. So how do we change our beliefs in a way that will lead to a more equitable society and more prosperity for all? The latest science suggests five rules of thumb. Rule one. The market isn’t a jungle. It’s a garden—and, tended like a garden, markets are the greatest social technology ever invented for solving human problems and creating prosperity. But unconstrained by social norms and democratic regulation, markets inevitably create more problems than they solve. to be afforded if and when we have growth. Economic inclusion is the cause of growth in market economies. The economy is people. The more people we include in it, the better it works. Rule three. The sole purpose of the corporation is not to enrich shareholders but rather to increase the welfare of all stakeholders— workers, customers, community, and shareholders alike. Rule four. Greed is not good. Being rapacious doesn’t make you a capitalist. Being rapacious makes you a sociopath. [laughter] And in an economy as dependent upon cooperation as ours, sociopathy is as bad for business as it is for this society. And, finally, unlike the laws of physics, the laws of economics are largely a choice. So, neoclassical economic theory has presented itself as immutable, natural law, when it is merely a collection of preferences, narratives, and social norms. If we want a more equitable, more just society, we need new economic beliefs. And here’s the good news: If we want new economic beliefs, now we know that all we have to do is choose to have them. Thank you.
I am a capitalist,
and after a 30-year career in capitalism
spanning three dozen companies,
generating tens of billions of dollars in market value,
I’m not just in the top one percent, I’m in the top .01 percent of all earners.
Today, I have come to share the secrets of our success,
because rich capitalists like me have never been richer.
So the question is, how do we do it?
How do we manage to grab
an ever-increasing share of the economic pie every year?
Is it that rich people are smarter than we were 30 years ago?
Is it that we’re working harder than we once did?
Are we taller, better looking?
Sadly, no.
It all comes down to just one thing:
economics.
Because, here’s the dirty secret.
There was a time in which the economics profession
worked in the public interest,
but in the neoliberal era,
today,
they work only for big corporations
and billionaires,
and that is creating a little bit of a problem.
We could choose to enact economic policies
that raise taxes on the rich,
regulate powerful corporations or raise wages for workers.
We have done it before.
But neoliberal economists would warn
that all of these policies would be a terrible mistake,
because raising taxes always kills economic growth,
and any form of government regulation
is inefficient,
and raising wages always kills jobs.
Well, as a consequence of that thinking,
over the last 30 years, in the USA alone,
the top one percent has grown 21 trillion dollars richer
while the bottom 50 percent have grown 900 billion dollars poorer,
a pattern of widening inequality that has largely repeated itself
across the world.
And yet, as middle class families struggle to get by
on wages that have not budged in about 40 years,
neoliberal economists continue to warn that the only reasonable response
to the painful dislocations of austerity and globalization
is even more austerity and globalization.
So, what is a society to do?
Well, it’s super clear to me what we need to do.
We need a new economics.
So, economics has been described as the dismal science,
and for good reason, because as much as it is taught today,
it isn’t a science at all,
in spite of all of the dazzling mathematics.
In fact, a growing number of academics and practitioners
have concluded that neoliberal economic theory is dangerously wrong
and that today’s growing crises of rising inequality
and growing political instability
are the direct result of decades of bad economic theory.
What we now know is that the economics that made me so rich isn’t just wrong,
it’s backwards,
because it turns out
it isn’t capital that creates economic growth,
it’s people;
and it isn’t self-interest that promotes the public good,
it’s reciprocity;
and it isn’t competition that produces our prosperity,
it’s cooperation.
What we can now see is that an economics that is neither just nor inclusive
can never sustain the high levels of social cooperation
necessary to enable a modern society to thrive.
So where did we go wrong?
Well, it turns out that it’s become painfully obvious
that the fundamental assumptions that undergird neoliberal economic theory
are just objectively false,
and so today first I want to take you through some of those mistaken assumptions
and then after describe where the science suggests prosperity actually comes from.
So, neoliberal economic assumption number one is
that the market is an efficient equilibrium system,
which basically means that if one thing in the economy, like wages, goes up,
another thing in the economy, like jobs, must go down.
So for example, in Seattle, where I live,
when in 2014 we passed our nation’s first 15 dollar minimum wage,
the neoliberals freaked out over their precious equilibrium.
“If you raise the price of labor,” they warned,
“businesses will purchase less of it.
Thousands of low-wage workers will lose their jobs.
The restaurants will close.”
Except …
they didn’t.
The unemployment rate fell dramatically.
The restaurant business in Seattle boomed.
Why?
Because there is no equilibrium.
Because raising wages doesn’t kill jobs, it creates them;
because, for instance,
when restaurant owners are suddenly required to pay restaurant workers enough
so that now even they can afford to eat in restaurants,
it doesn’t shrink the restaurant business,
it grows it, obviously.
(Applause)
Thank you.
The second assumption is
that the price of something is always equal to its value,
which basically means that if you earn 50,000 dollars a year
and I earn 50 million dollars a year,
that’s because I produce a thousand times as much value as you.
Now,
it will not surprise you to learn
that this is a very comforting assumption
if you’re a CEO paying yourself 50 million dollars a year
but paying your workers poverty wages.
But please, take it from somebody who has run dozens of businesses:
this is nonsense.
People are not paid what they are worth.
They are paid what they have the power to negotiate,
and wages’ falling share of GDP
is not because workers have become less productive
but because employers have become more powerful.
And —
(Applause)
And by pretending that the giant imbalance in power between capital and labor
doesn’t exist,
neoliberal economic theory became essentially
a protection racket for the rich.
The third assumption, and by far the most pernicious,
is a behavioral model
that describes human beings as something called “homo economicus,”
which basically means that we are all perfectly selfish,
perfectly rational and relentlessly self-maximizing.
But just ask yourselves,
is it plausible that every single time for your entire life,
when you did something nice for somebody else,
all you were doing was maximizing your own utility?
Is it plausible that when a soldier jumps on a grenade to defend fellow soldiers,
they’re just promoting their narrow self-interest?
If you think that’s nuts,
contrary to any reasonable moral intuition,
that’s because it is
and, according to the latest science,
not true.
But it is this behavioral model
which is at the cold, cruel heart of neoliberal economics,
and it is as morally corrosive
as it is scientifically wrong
because, if we accept at face value
that humans are fundamentally selfish,
and then we look around the world
at all of the unambiguous prosperity in it,
then it follows logically,
then it must be true by definition,
that billions of individual acts of selfishness
magically transubstantiate into prosperity and the common good.
If we humans are merely selfish maximizers,
then selfishness is the cause of our prosperity.
Under this economic logic,
greed is good,
widening inequality is efficient,
and the only purpose of the corporation
can be to enrich shareholders,
because to do otherwise would be to slow economic growth
and harm the economy overall.
And it is this gospel of selfishness
which forms the ideological cornerstone of neoliberal economics,
a way of thinking which has produced economic policies
which have enabled me and my rich buddies in the top one percent
to grab virtually all of the benefits of growth over the last 40 years.
But,
if instead
we accept the latest empirical research,
real science, which correctly describes human beings
as highly cooperative,
reciprocal
and intuitively moral creatures,
then it follows logically
that it must be cooperation
and not selfishness
that is the cause of our prosperity,
and it isn’t our self-interest
but rather our inherent reciprocity
that is humanity’s economic superpower.
So at the heart of this new economics
is a story about ourselves that grants us permission to be our best selves,
and, unlike the old economics,
this is a story that is virtuous
and also has the virtue of being true.
Now,
I want to emphasize that this new economics
is not something I have personally imagined or invented.
Its theories and models are being developed and refined
in universities around the world
building on some of the best new research in economics,
complexity theory, evolutionary theory,
psychology, anthropology and other disciplines.
And although this new economics does not yet have its own textbook
or even a commonly agreed upon name,
in broad strokes
its explanation of where prosperity comes from goes something like this.
So, market capitalism is an evolutionary system
in which prosperity emerges
through a positive feedback loop
between increasing amounts of innovation and increasing amounts of consumer demand.
Innovation is the process by which we solve human problems,
consumer demand is the mechanism through which the market selects
for useful innovations,
and as we solve more problems, we become more prosperous.
But as we become more prosperous,
our problems and solutions
become more complex,
and this increasing technical complexity
requires ever higher levels of social and economic cooperation
in order to produce the more highly specialized products
that define a modern economy.
Now, the old economics is correct, of course,
that competition plays a crucial role in how markets work,
but what it fails to see
is that it is largely a competition between highly cooperative groups —
competition between firms, competition between networks of firms,
competition between nations —
and anyone who has ever run a successful business knows
that building a cooperative team by including the talents of everyone
is almost always a better strategy than just a bunch of selfish jerks.
So how do we leave neoliberalism behind
and build a more sustainable, more prosperous
and more equitable society?
The new economics suggests just five rules of thumb.
First is that successful economies are not jungles, they’re gardens,
which is to say that markets,
like gardens, must be tended,
that the market is the greatest social technology ever invented
for solving human problems,
but unconstrained by social norms or democratic regulation,
markets inevitably create more problems than they solve.
Climate change,
the great financial crisis of 2008
are two easy examples.
The second rule is
that inclusion creates economic growth.
So the neoliberal idea
that inclusion is this fancy luxury
to be afforded if and when we have growth is both wrong and backwards.
The economy is people.
Including more people in more ways
is what causes economic growth in market economies.
The third principle
is the purpose of the corporation is not merely to enrich shareholders.
The greatest grift in contemporary economic life
is the neoliberal idea that the only purpose of the corporation
and the only responsibility of executives
is to enrich themselves and shareholders.
The new economics must and can insist
that the purpose of the corporation
is to improve the welfare of all stakeholders:
customers, workers,
community and shareholders alike.
Rule four:
greed is not good.
Being rapacious doesn’t make you a capitalist,
it makes you a sociopath.
(Laughter)
(Applause)
And in an economy as dependent upon cooperation at scale as ours,
sociopathy is as bad for business as it is for society.
And fifth and finally,
unlike the laws of physics,
the laws of economics are a choice.
Now, neoliberal economic theory
has sold itself to you as unchangeable natural law,
when in fact it’s social norms and constructed narratives
based on pseudoscience.
If we truly want a more equitable,
more prosperous and more sustainable economy,
if we want high-functioning democracies
and civil society,
we must have a new economics.
And here’s the good news:
if we want a new economics,
all we have to do is choose to have it.
Thank you.
(Applause)
Moderator: So Nick, I’m sure you get this question a lot.
If you’re so unhappy with the economic system,
why not just give all your money away and join the 99 percent?
Nick Hanauer: Yeah, no, yes, right.
You get that a lot. You get that a lot.
“If you care so much about taxes, why don’t you pay more,
and if you care so much about wages, why don’t you pay more?”
And I could do that.
The problem is,
it doesn’t make that much difference,
and I have discovered a strategy
that works literally a hundred thousand times better —
Moderator: OK.
NH: which is to use my money to build narratives and to pass laws
that will require all the other rich people
to pay taxes and pay their workers better.
(Applause)
And so, for example,
the 15-dollar minimum wage that we cooked up
has now affected 30 million workers.
So that works better.
Moderator: That’s great.
If you change your mind, we’ll find some takers for you.
NH: OK. Thank you. Moderator: Thank you very much.
I am a capitalist,
and after a 30-year career in capitalism
spanning three dozen companies,
generating tens of billions of dollars in market value,
I’m not just in the top one percent, I’m in the top .01 percent of all earners.
Today, I have come to share the secrets of our success,
because rich capitalists like me have never been richer.
So the question is, how do we do it?
How do we manage to grab
an ever-increasing share of the economic pie every year?
Is it that rich people are smarter than we were 30 years ago?
Is it that we’re working harder than we once did?
Are we taller, better looking?
Sadly, no.
It all comes down to just one thing:
economics.
Because, here’s the dirty secret.
There was a time in which the economics profession
worked in the public interest,
but in the neoliberal era,
today,
they work only for big corporations
and billionaires,
and that is creating a little bit of a problem.
We could choose to enact economic policies
that raise taxes on the rich,
regulate powerful corporations or raise wages for workers.
We have done it before.
But neoliberal economists would warn
that all of these policies would be a terrible mistake,
because raising taxes always kills economic growth,
and any form of government regulation
is inefficient,
and raising wages always kills jobs.
Well, as a consequence of that thinking,
over the last 30 years, in the USA alone,
the top one percent has grown 21 trillion dollars richer
while the bottom 50 percent have grown 900 billion dollars poorer,
a pattern of widening inequality that has largely repeated itself
across the world.
And yet, as middle class families struggle to get by
on wages that have not budged in about 40 years,
neoliberal economists continue to warn that the only reasonable response
to the painful dislocations of austerity and globalization
is even more austerity and globalization.
So, what is a society to do?
Well, it’s super clear to me what we need to do.
We need a new economics.
So, economics has been described as the dismal science,
and for good reason, because as much as it is taught today,
it isn’t a science at all,
in spite of all of the dazzling mathematics.
In fact, a growing number of academics and practitioners
have concluded that neoliberal economic theory is dangerously wrong
and that today’s growing crises of rising inequality
and growing political instability
are the direct result of decades of bad economic theory.
What we now know is that the economics that made me so rich isn’t just wrong,
it’s backwards,
because it turns out
it isn’t capital that creates economic growth,
it’s people;
and it isn’t self-interest that promotes the public good,
it’s reciprocity;
and it isn’t competition that produces our prosperity,
it’s cooperation.
What we can now see is that an economics that is neither just nor inclusive
can never sustain the high levels of social cooperation
necessary to enable a modern society to thrive.
So where did we go wrong?
Well, it turns out that it’s become painfully obvious
that the fundamental assumptions that undergird neoliberal economic theory
are just objectively false,
and so today first I want to take you through some of those mistaken assumptions
and then after describe where the science suggests prosperity actually comes from.
So, neoliberal economic assumption number one is
that the market is an efficient equilibrium system,
which basically means that if one thing in the economy, like wages, goes up,
another thing in the economy, like jobs, must go down.
So for example, in Seattle, where I live,
when in 2014 we passed our nation’s first 15 dollar minimum wage,
the neoliberals freaked out over their precious equilibrium.
“If you raise the price of labor,” they warned,
“businesses will purchase less of it.
Thousands of low-wage workers will lose their jobs.
The restaurants will close.”
Except …
they didn’t.
The unemployment rate fell dramatically.
The restaurant business in Seattle boomed.
Why?
Because there is no equilibrium.
Because raising wages doesn’t kill jobs, it creates them;
because, for instance,
when restaurant owners are suddenly required to pay restaurant workers enough
so that now even they can afford to eat in restaurants,
it doesn’t shrink the restaurant business,
it grows it, obviously.
(Applause)
Thank you.
The second assumption is
that the price of something is always equal to its value,
which basically means that if you earn 50,000 dollars a year
and I earn 50 million dollars a year,
that’s because I produce a thousand times as much value as you.
Now,
it will not surprise you to learn
that this is a very comforting assumption
if you’re a CEO paying yourself 50 million dollars a year
but paying your workers poverty wages.
But please, take it from somebody who has run dozens of businesses:
this is nonsense.
People are not paid what they are worth.
They are paid what they have the power to negotiate,
and wages’ falling share of GDP
is not because workers have become less productive
but because employers have become more powerful.
And —
(Applause)
And by pretending that the giant imbalance in power between capital and labor
doesn’t exist,
neoliberal economic theory became essentially
a protection racket for the rich.
The third assumption, and by far the most pernicious,
is a behavioral model
that describes human beings as something called “homo economicus,”
which basically means that we are all perfectly selfish,
perfectly rational and relentlessly self-maximizing.
But just ask yourselves,
is it plausible that every single time for your entire life,
when you did something nice for somebody else,
all you were doing was maximizing your own utility?
Is it plausible that when a soldier jumps on a grenade to defend fellow soldiers,
they’re just promoting their narrow self-interest?
If you think that’s nuts,
contrary to any reasonable moral intuition,
that’s because it is
and, according to the latest science,
not true.
But it is this behavioral model
which is at the cold, cruel heart of neoliberal economics,
and it is as morally corrosive
as it is scientifically wrong
because, if we accept at face value
that humans are fundamentally selfish,
and then we look around the world
at all of the unambiguous prosperity in it,
then it follows logically,
then it must be true by definition,
that billions of individual acts of selfishness
magically transubstantiate into prosperity and the common good.
If we humans are merely selfish maximizers,
then selfishness is the cause of our prosperity.
Under this economic logic,
greed is good,
widening inequality is efficient,
and the only purpose of the corporation
can be to enrich shareholders,
because to do otherwise would be to slow economic growth
and harm the economy overall.
And it is this gospel of selfishness
which forms the ideological cornerstone of neoliberal economics,
a way of thinking which has produced economic policies
which have enabled me and my rich buddies in the top one percent
to grab virtually all of the benefits of growth over the last 40 years.
But,
if instead
we accept the latest empirical research,
real science, which correctly describes human beings
as highly cooperative,
reciprocal
and intuitively moral creatures,
then it follows logically
that it must be cooperation
and not selfishness
that is the cause of our prosperity,
and it isn’t our self-interest
but rather our inherent reciprocity
that is humanity’s economic superpower.
So at the heart of this new economics
is a story about ourselves that grants us permission to be our best selves,
and, unlike the old economics,
this is a story that is virtuous
and also has the virtue of being true.
Now,
I want to emphasize that this new economics
is not something I have personally imagined or invented.
Its theories and models are being developed and refined
in universities around the world
building on some of the best new research in economics,
complexity theory, evolutionary theory,
psychology, anthropology and other disciplines.
And although this new economics does not yet have its own textbook
or even a commonly agreed upon name,
in broad strokes
its explanation of where prosperity comes from goes something like this.
So, market capitalism is an evolutionary system
in which prosperity emerges
through a positive feedback loop
between increasing amounts of innovation and increasing amounts of consumer demand.
Innovation is the process by which we solve human problems,
consumer demand is the mechanism through which the market selects
for useful innovations,
and as we solve more problems, we become more prosperous.
But as we become more prosperous,
our problems and solutions
become more complex,
and this increasing technical complexity
requires ever higher levels of social and economic cooperation
in order to produce the more highly specialized products
that define a modern economy.
Now, the old economics is correct, of course,
that competition plays a crucial role in how markets work,
but what it fails to see
is that it is largely a competition between highly cooperative groups —
competition between firms, competition between networks of firms,
competition between nations —
and anyone who has ever run a successful business knows
that building a cooperative team by including the talents of everyone
is almost always a better strategy than just a bunch of selfish jerks.
So how do we leave neoliberalism behind
and build a more sustainable, more prosperous
and more equitable society?
The new economics suggests just five rules of thumb.
First is that successful economies are not jungles, they’re gardens,
which is to say that markets,
like gardens, must be tended,
that the market is the greatest social technology ever invented
for solving human problems,
but unconstrained by social norms or democratic regulation,
markets inevitably create more problems than they solve.
Climate change,
the great financial crisis of 2008
are two easy examples.
The second rule is
that inclusion creates economic growth.
So the neoliberal idea
that inclusion is this fancy luxury
to be afforded if and when we have growth is both wrong and backwards.
The economy is people.
Including more people in more ways
is what causes economic growth in market economies.
The third principle
is the purpose of the corporation is not merely to enrich shareholders.
The greatest grift in contemporary economic life
is the neoliberal idea that the only purpose of the corporation
and the only responsibility of executives
is to enrich themselves and shareholders.
The new economics must and can insist
that the purpose of the corporation
is to improve the welfare of all stakeholders:
customers, workers,
community and shareholders alike.
Rule four:
greed is not good.
Being rapacious doesn’t make you a capitalist,
it makes you a sociopath.
(Laughter)
(Applause)
And in an economy as dependent upon cooperation at scale as ours,
sociopathy is as bad for business as it is for society.
And fifth and finally,
unlike the laws of physics,
the laws of economics are a choice.
Now, neoliberal economic theory
has sold itself to you as unchangeable natural law,
when in fact it’s social norms and constructed narratives
based on pseudoscience.
If we truly want a more equitable,
more prosperous and more sustainable economy,
if we want high-functioning democracies
and civil society,
we must have a new economics.
And here’s the good news:
if we want a new economics,
all we have to do is choose to have it.
Thank you.
(Applause)
Moderator: So Nick, I’m sure you get this question a lot.
If you’re so unhappy with the economic system,
why not just give all your money away and join the 99 percent?
Nick Hanauer: Yeah, no, yes, right.
You get that a lot. You get that a lot.
“If you care so much about taxes, why don’t you pay more,
and if you care so much about wages, why don’t you pay more?”
And I could do that.
The problem is,
it doesn’t make that much difference,
and I have discovered a strategy
that works literally a hundred thousand times better —
Moderator: OK.
NH: which is to use my money to build narratives and to pass laws
that will require all the other rich people
to pay taxes and pay their workers better.
(Applause)
And so, for example,
the 15-dollar minimum wage that we cooked up
has now affected 30 million workers.
So that works better.
Moderator: That’s great.
If you change your mind, we’ll find some takers for you.
NH: OK. Thank you. Moderator: Thank you very much.
Material Progress => Human Development
Greed => Generosity
Competition => Cooperation
Individualism + Hedonism => Social Responsibility
We briefly explain these four dimensions of conflict between ideals of Islam and modern Economics below. 1: Human Development: Ever since “The Wealth of Nations”, modern economics has made our individual and social goals to be the pursuit of wealth. Modern nations engage in collective efforts to maximize GDP per capita, without realizing the tremendous harms and damage created by this senseless pursuit. Islam teaches us that every human being is born with infinite potential, and the goal of our lives is to struggle to realize the potential for excellence within each soul. Our collective goal as a society should be to enable every individual to reach his maximum potential. This Islamic vision of “human development” leads to very different ways to think about organization of economic activities. For more details, see “Is Development the Accumulation of Wealth? Islamic Views”. 2: Generosity: Modern economics takes greed as axiomatic. It is assumed that evolution has shaped us to put our personal interests above those of the society. This assumption is dramatically in conflict with the reality of human behavior. Human beings often make great sacrifices for others, and for the social good. There is a huge economic literature on “altruism” which seeks to explain “generosity” as a manifestation of long run selfish interests. Recent developments in evolutionary theory show that generosity and cooperation are built into our natures. These traits are far more helpful for survival of societies than the early Darwinist assumptions of selfishness and cut-throat competition. Islamic teachings, aligned with human nature built into us by our Creator, say that we are generous by nature, but can be trained to become selfish. Whereas economics wrongly assumes that man is selfish (and 2nd Gen IE agrees), a revolutionary Islamic Economics could be built on the foundation that man is inherently generous. This leads to many new ideas for economic institutions, such as the “Gift Economy”. This is currently being researched within an Islamic framework (see The Islamic Gift Economy), and also by many secular authors (see, for example, The Gift Economy & The Maternal Roots of the Gift Economy). 3: Cooperation: Misunderstanding evolution led economists to believe that competition is the state of nature. This creates efficient firms, and stronger individuals. Evolutionary biologists have now reversed these findings. See, for example, David Sloan Wilson’s seven principles of cooperative behavior. These principles are strongly aligned with Islamic teachings. Instead of 2nd Gen efforts to fit competition into Islam, we need to show how Islam provides us with working models of cooperation and generosity, built into our institutional structures of Waqf and Takaful. This can guide us, and provide the way forward to solutions to pressing problems facing mankind today. These problems require cooperative solutions, but current economic models cannot conceive of the possibility of cooperative behavior. For more details, see “Islamic Economics: A Survey of the Literature”. 4: Social Responsibility: The idea that we are all brothers and sisters, sons and daughters of Adam and Hawwa (AS), leads to conceptualizing all of humanity as one family. This means that we are responsible to take care of each other. This sense of responsibility is embodied in the Islamic concept of “Farz-e-Kifaya”, the collective responsibilities of society. Among these is the necessity of taking care of basic needs of all members of the society. The central economic concern of an Islamic society would be to make sure that all members are provided for, in terms of housing, clothing, food, education, and healthcare. This differs radically from the concern for maximization of GDP, currently top priority in nearly all Islamic countries. Unfortunately, 2nd Gen IE has also gone along with this call for pursuit of wealth, under the misconception that this is the best way to fight poverty. A radical alternative, aligned with Islamic views, was proposed by Mahbubul Haq: “We were taught to take care of our GDP so that we may take care of our poverty. Let us reverse it; let us take care of our poverty such that we may take care of our GDP.” For more details, see The Human Development Revolution, and Hunger as the Primary Economic Problem.
Mosts economists are political apologists masquerading as economists. They tailor theories to help politicians demonstrate the virtue and necessity of their quest for more power. The field of economics is used to give a scientific justification for things the government wants to do. The vital social task of the intellectuals is to persuade the majority by ideology that their government is good, wise and inevitable. Competition in public utilities. The paradox of thrift If you save money, you will consume less and that will cause gdp to decline and then you will have less to save. Flaws of Modern Economics
- Social Sciences are not objective
- Contrary to the idea of “science”, modern social sciences are not objective, and are not ethically neutral.
- The “laws of economics” are not on par with the “laws of physics”.
- Scarcity
- This was in conflict with Fazlullah – the bounty and generosity of Allah, often mentioned in the Quran. The 2ndGeneration, trained in capitalist economists, accepted scarcity as an objective fact and reality, and sought to re-interpret the Quran to accommodate this turnabout.
- Utility maximization
- The pursuit of pleasure is the goal of all rational behavior – was rejected by the 1st Generation, but accepted by the 2nd Generation.
- Greed
- Human beings are naturally generous and cooperative, but Economic theory teaches us to be selfish and greedy.
- Maximize Pleasure
- Human beings care for others and managers of firms feel social responsibility, but economic theory teaches us to maximize pleasure and profits.
- Loss of faith in Christianity led to the search in Europe for alternative models for organizing personal and social behavior. If there is no God and Judgment, then it is “rational” to maximize pleasure on this earth.
Self-Determination is the opposite of colonialism. United Nations has the right to self-determination in its charter. The colonial powers do not submit to the United Nations. They decide who gets self-determination and when, based on whether the nation has suffered enough. Expressing your right to self-determination is not enough to get it. A large enough group resisting the system can achieve it. The usual excuses: They’re uncivilised and barbaric. They’ll destroy the economy and leave everyone in poverty. They’ll institute slavery, etc. If you don’t do things according to their way, they stick a gun in your face. To impose the European way of life on people, until they are sufficiently “Civilized” They spent decades shooting people who disagreed with them. The Islamic Right to Protection from Exploitation “Do not consume the wealth of others unjustly.” (4:29)
The real power is from trade and corporations
- Muslims need to become billionaires.
- The battle of empires is economic.
Economic struggle [Businessmen]
Boycott the enemy
- Follow the BDS regime
- Promote alternatives
- Support the Pro-Palestine, Pro-Islam community
Attack an raid the enemies caravans
Support the frontline
- Fundraising for the mujahideen
- Financing a Mujahid
- Taking care of the family of a Mujahid
- Sponsoring the family of a shaheed
- Sponsoring the families of the prisoners of war
- Paying your zakah to the mujahideen
- Contributing to the medical needs of the mujahideen
- Freeing the prisoners
