Summer School 8: Big ideas and life lessons from Marx, Keynes and Smith and more

0:00This message comes from Capital One. Say hello to stress-free subscription management. Easily track, block, or cancel recurring charges right from the Capital One mobile app. Simple as that you can't a lot of capital one. for professors, parents, welcome to your commencement ceremony for your master's degree in the economic history of the world. We stand here on the great lawn of Planet Money University, a place that only exists in our minds, yet a place we return to every summer with a sincere desire to learn a bunch of facts that we can amuse our friends and family with during backyard barbecues.

0:56Today on the show, the greatest graduation in history. Because it features the greatest economic minds in history. We'll hear from Adam Smith, Karl Marx, John Maynard Keynes, and some surprising guests as they provide a little bit of economics and a lot of life advice. It's been 5 ,000 years in the making. This is Lesson 8, today and beyond. I'm Robert Smith. While our graduation speakers are putting on their robes and sneaking extra glasses of champagne, I see you, John Maynard Keynes. We have some business here to take care of because you have not yet proved to us that you are worthy of a completely bogus fake degree from a made up school.

1:43You have to pass a test. We have a fiendishly clever final quiz that we've now put up online. It's at npr.org slash summer school. Eight questions are all you need to answer, but you might need to go back and study a bit. This summer school session has moved fast. It was like the economic history version of Billy Joel's 1989 hit, We Didn't Start the Fire. We went from stone coins to spice shills to John Law printing paper bills, stock trades, bonds made. Amsterdam was getting paid. For plague survivors, work was keen. Let it spask the new machines. Ricardo, Biddle, panics were the latest scene.

2:22we didn't... Sorry. Almost embarrassed myself there and violated copyright law. But you get the idea. Study up, take the test, and sit back and enjoy your last day in summer school. Coming up after the break, we desperately try to finish up the last 50 years of history and then the ceremony you've been waiting for.

2:48This message comes from Vanguard. Capturing value in the bond market is not easy. That's why Vanguard offers a suite of over 80 institutional quality bond funds, actively managed by a 200-person global team of sector specialists, analysts, and traders. They're designed for financial advisors looking to give their clients consistent results year in and year out. See the record at vanguard.com slash audio. That's vanguard.com slash audio. All investing is subject to risk. Vanguard Marketing Corporation Distributor. This message comes from Capital One with the Venture X Card. Earn unlimited double miles, a$300 annual Capital One travel credit, and access to airport lounges.

3:33Capital One. What's in your wallet? Terms apply. Details at CapitalOne.com. Welcome back. graduates to be. Adam Smith and Karl Marx are backstage doing vocal warm-ups, the lips, the teeth, the tip of the tongue. But first, we need to finish up the long stretch of economic timeline that we started in episode one. The reason we wanted to spend the summer talking about economic history is not just for the trivia. It's so we can understand our current moment. Basically, to answer the question, can economics make life better for us all? Has it lived up to its promise? That's the subject of an episode that aired on the Planet Money Indicator in 2018.

4:15It used a very clever gimmick to figure out how we should look at the last 50 years of human achievement. Stacey Vanek-Smith and Cardiff Garcia have the story from 2018. There's this idea we've been obsessed with recently. Destruction tends to happen quickly. Progress often is slow. And this combination of sudden bad things and slow good things, it kind of messes up the way we see the world. The news is all about bad things. Hurricanes, school shootings, fires, all the political fighting. And in the background, these good things happen kind of sort of invisibly. But what would happen if instead of us getting news updates every day or multiple times a day or every five minutes?

4:58However long it takes for my Twitter feed to update. Yeah. What if we only got news updates every 50 years? things would look really different. Can we get you to just introduce yourself? Yeah. So hello, my name is Hannah Ritchie. Yeah, my name is Max Rosa. I'm a researcher at the University of Oxford. Hannah and Max work on this project at Oxford called Our World in Data. We got the idea for the 50-year newspaper from them. Max had written about the concept in an article he wrote for, ironically enough, The Washington Post, a daily newspaper. But he didn't actually make a version of this 50-year newspaper himself.

5:33So we called up Max and Hannah and we put them on the spot. And we said, OK, guys, the last version of this paper would have been published on January 1st, 1968. It is about to come out now, January 1st, 2018. What do we put on the front page? Well, obviously, there's going to be a mix of good and bad news. To be honest, I kind of just want to get the bad news over with. Yes, let's do that. Let's start there. First headline. Is it just me or is it hot in here? Carbon dioxide emissions, which contribute to global warming, have more than doubled over the last 50 years. Hannah says this means we're on track to see the temperature increase by more than 3.5 degrees over the next 100 years.

6:13And we've heard a lot about the terrible things that that temperature increase will mean. The next story, more bad news. Cardiff, you do the headline. Humans to animals drop dead. We really are kind of eradicating biodiversity at a really fast rate. Since 1970, the number of terrestrial animals has declined by 60%. Wow. Really? Yeah. Wow. There's been kind of this new term coined the Anthropocene. And Anthropo is human, so it's basically the humans are taking over the world, and this geological period will be defined by us. 60 % decline in the number of terrestrial animals. That is an astonishing figure and a little bit depressing.

6:59A little bit. But the thing to know about all this bad news, Stacey, is that it's also kind of the side effect of really great news. And Max and Hannah argue that some of the stories on the front page of our paper really need to reflect that. So definitely also on the front page, the next headline, this one's yours. Poor no more. Over these five decades, we saw global poverty fall from well over 60 percent to below 10 percent in the latest figures. Wow. That seems huge. It is huge. Like, this development is really huge. We've gone from 6 in 10 people living in poverty, most of the people in the world, to just 1 in 10.

7:40Max says it's because the world has gotten wealthier, and that's meant a better life for most of the people on the planet. It really shows that modern economic growth can be and often is a positive sum game, right? Next headline, child mortality plummets. Last time when we had the newspaper out, we still live in a world where one out of six children were dead before it was five years old. Today, it's one in 22 kids who die before the age of five. And Max says this is still unacceptably high. He's right, of course. But that is still profoundly better than it was 50 years ago. People have more access to health care, education.

8:20Smallpox has been eradicated. And polio has almost been eradicated. More people have access to clean water and to food. And in fact, food brings us to our next headline. Blame it on the grain. The share of people that are defined as undernourished or hungry fall in nearly two-thirds in the last 50 years. Back in 1968, more than a third of the people living in developing countries didn't have enough to eat. Now, it's about 12%. And this has really been driven by a range of factors, such as fertilizer, improved crop varieties, irrigation, agricultural machinery. All of these have contributed to see this really dramatic yield increase.

9:02You know what's interesting about this, Hannah, is that when we think about technological advancement, we tend to think about like high-tech stuff like our iPhones or something. But actually it sounds like one of the most impressive and most significant innovations has actually been in this kind of boring sector of agriculture. But that is actually what's made a huge substantive difference in people's lives. Right. Together, they've probably saved the lives of three, four billion people. So these are the really, really crucial technological advancements, I'd say. So if you read all five stories on the front of this 50-year newspaper, you'll sort of notice that the good news and the bad news are linked together.

9:46The bad news was the cost of the good news, because if you think about it, higher emissions and less biodiversity. These are the costs of the economic growth that made all of the good news possible. And the good news is really good. It's great. Child mortality falling, people getting wealthier. Those are really good things, but they've come at a really big price. That's right. And so it seems like the challenge for the next 50 years is how do you keep the good news coming? How do you keep making things better for people while also not totally screwing up the planet?

10:20Wait, wait, Stacey, should we even include the fall of communism on here? Oh, whatever. Do that one in 2068. Cardiff Garcia and Stacey Fanick-Smith. Let's call them our valedictorians for the class of 2024. They're also members of our Honor Society of Phi Beta Planeta, which you too can join if you get a perfect score on our final quiz. It's at npr.org slash summer school. Okay, we'll let the summer school choir perform while we take a break. And when we return, Adam Smith takes the stage.

11:01This message comes from Apollo Global Management, who believes the global industrial renaissance is transforming the world. Over the next decade, industries like energy, infrastructure, and technology will need an estimated$75 to$100 trillion to modernize and meet demand. Long-term projects need long-duration capital. That's where Apollo steps in. With scale, flexibility, and a focus on growth, they're partnering with companies to drive the future, one innovation at a time. Learn more at thinkitnew.com slash renaissance. This message comes from LinkedIn ads. One of the hardest parts about B2B marketing is reaching the right audience.

11:41That's why you need LinkedIn ads. You can target your buyers by job title, company, role, seniority, and skills. All the professionals you need to reach in one place. Get a$250 credit on your next campaign so you can try it yourself. Just go to linkedin.com slash nprpod. That's linkedin.com slash nprpod. Terms and conditions apply. Only on LinkedIn ads. This message comes from Insperity. Excellence takes drive, work, perseverance. Tiger Woods brings it to the course. Insperity brings it to your business. Want to be the best? Work with the best. Insperity. How you HR matters. Learn more at insperity.com slash tiger.

12:26Oh, to be a new graduate from a free podcast university. I remember it well. And I know that the world is scary out there for people with clearly fake credentials. But do not worry. Today, the most influential thinkers in economics will travel through time to give you some advice to take with you out into the real world. Here's how it's going to work. We will invite to the stage the people who have written biographies of the world's most famous economists, and they will give us a brief synopsis of where their subject fits into history and what that economist might tell the class of 2024. Warning, the economists don't always agree with each other.

13:05Fight, fight, fight. First up, the father of economics, the captain of capitalism, Adam Smith. Adam Smith will be presented by Russ Roberts, who is the John and Gene Denault Research Fellow at the Hoover Institution, and the author of the book, How Adam Smith Can Change Your Life. Before you change our lives, Russ, could you give the graduates a few words about how we should think of Adam Smith? Adam Smith was important in economics. Well, I mean, more than just economics, don't you think? I mean, he really was the first social scientist. He understood that many of the things that we see in the world around us emerge without central design or planning by any one individual, but are the result of all of our actions.

13:50In modern times, we would call an example of that a market. No one person decides what houses should cost in a particular city or how much a barber could charge for a haircut or a stylist. These are things that just happen. We take them for granted. And one of the things we take for granted more than anything else is that when we want to go buy something, it's there waiting for us in countries that adopt a market-based economy. And Smith understood that in a way that was really not so obvious and reminded us to be aware of its magnificence. He's not, by the way, a free market ideologue, but nor is he a central planner.

14:27What he was trying to illuminate was the power of self-interest, not selfishness, but how self-interest combined, crucially, with competition could make our lives better. Now, you might expect an Adam Smith graduation speech to push everyone to pursue the profit motive and self-interest in a free market, but this isn't business school today. And Adam Smith was also a moral philosopher who thought about human needs and desires beyond money. I know, I know. Russ Roberts, take the microphone and give us your interpretation of what Adam Smith would say. You know, if Adam Smith were alive today and had a chance to give a commencement address to a group of graduates, I think he would draw in his less famous book, The Theory of Moral Sentiments, which he published in 1759.

15:14And in there he wrote, man naturally desires not only to be loved but to be lovely. Now, he was writing in 1759, so he said man. But by man, he meant men and women, human beings, have two urges. The first is to be loved. And by loved, he meant respected, praised, to matter, to be honored. And by lovely, he meant, writing in 1759, to be worthy of praise, worthy of honor, worthy of respect. So he understood we're flawed. He understood that we often pursue our self-interest at the expense of other people. But he believed that deep down, we also wanted to be decent because we understood that if we are to be respected, we have to earn it.

15:56And I think that's excellent advice for anyone who's just graduating and moving into the next stage of their life, which is be lovely, be worthy of honor, respect, and praise. Thank you very much. And thank you, Russ Roberts, who I should say is one of the OG economics podcasters. His show Econ Talk is one of our favorites here at Planet Money. Next up, a man who did not comb his hair or trim his substantial beard for the occasion. How could he? It's his trademark. I'm talking about the great Karl Marx. Now, you may know him as the inspiration for proletariat revolutions around the world. But before that, Karl Marx was primarily a long-winded economic writer.

16:39He came 100 years after Adam Smith and said, yeah, that whole capitalism thing isn't working. To share his words of wisdom, please welcome to the graduation stage Vanessa Wills, Professor of Philosophy at the George Washington University. Professor, first we need the world's shortest recap of Marxist thought. Karl Marx existed under capitalism like we do. And capitalism is a system where some people own the means of production, factories, raw materials, technology, and so on. And lots of people don't. And the people who don't sell their labor power. They sell their ability to work, which is the only thing that they have.

17:24And the result is that over time, the people who sell their labor power form a mass of poor people who don't have meaningful control in their society. And those who own the means of productions become quite wealthy, right? They do okay for themselves. Marx thought that this was a necessary result of capitalism, that this was something that could not be done away with under capitalism. And so what he advocated instead was socialism, sometimes called communism. And that is an economic system where workers own the means of production. There is shared democratic control over society's resources. So every person can develop their own interests, capacities, and talents, and they can do that as part of a community where people are helping one another to flourish as well.

18:25Karl Marx famously died before a lot of the revolutions that would happen in his name. But if he were to get the chance to stand in front of us now, what would be his advice? Vanessa, you may address the assembled crowd. Graduates, congratulations on making it to this point of completion of the Planet Money Summer School. I think that if Karl Marx were here with us today, he would give you the same advice he gave to a friend of his in a letter that he wrote during his lifetime. And that was to engage in the ruthless criticism of all that exists. Marx went on,

19:18Now, we can ask, what does Marx mean by ruthless criticism? He doesn't just mean being a hater, although Marx could have been accused of being a hater at times. he's talking about really looking at the world around us and seeing it as a world that is in movement, about which we can ask, how did this come to be? Why does this institution have legitimacy? Why does that person deserve our obedience? And those questions can lead us to answers not just about how we got where we are, but also about where we want to be and how we can get there. So I think that we very much live in a time that is not so different from Marxist time.

20:09And in fact, I would go so far as to say it is Marxist time because we still live in a capitalist system and we still live in a world where human beings are pitted one against the other. And if we ever want to change that, then I think we need to take up that advice. Thank you very much. Oh, the students love them. Some Marx. He'll be signing dorm room posters and t-shirts after the ceremony. And thank you to Professor Wills, author of Marx's Ethical Vision. Let's fit in one more speech before we take a quick break. And let's go a little less obvious this time. Sadie Alexander, born in 1898, a little after Karl Marx died.

20:52Sadie Alexander doesn't make it into a lot of economics textbooks, so we've invited Nina Banks, a professor of economics at Bucknell University, to sing her praises. Professor, tell the graduates why we should know the name Sadie Alexander. So Sadie Tanner Macelle Alexander was the first African American economist. Unfortunately, because of gender and racial discrimination, She was prevented from having a career in economics after she received her doctorate degree in 1921. But I found through going through her archival records that she had actually spent her entire life focused on economic concerns facing African Americans, and that she used the law as well as her knowledge of economics in order to challenge those inequities.

21:41She just happened to do it through the civil rights movement rather than publishing long books of economic philosophy like our first two speakers. So, Professor, the lectern is open. The crowd is waiting for a life lesson from Sadie Alexander. So if Sadie Alexander were addressing a graduating class of students, she would want them to focus on the major economic and political challenges that our nation is currently facing. During her lifetime, she lived through racial violence. She lived through the Great Depression, the New Deal era, McCarthyism, and the Civil Rights Movement. So Sadie Alexander would propose that government implement policies that would help to expand the rights of citizenship through providing job opportunities to everybody.

22:39And she believed that the government could provide full employment by creating public works projects that focused on pressing social needs such as inadequate housing and food insecurity. And so Sadie Alexander would challenge you to remember all of the important lessons that you've learned about economic history through Planet Money. And she would encourage you to always remember that people have dignity and to promote their dignity. She would encourage you to be a person of integrity, and she would also most definitely encourage you to be outspoken and to challenge inequities and injustices that prevail within our society.

23:29Thank you very much, and good luck, graduates. Marks and Smith may have had their theories, but never forget that there are real people and real injustices out there. Thank you, Professor Nina Banks from Bucknell University. She edited the book Democracy, Race, and Justice, the speeches and writings of Sadie T.M. Alexander. For those of you here on the lawn, we will now read out the names of every single one of our summer school listeners. Should only take a few hours. For those of you listening at home, we'll take a quick break before we hear from the great icons of the modern economy, John Maynard Keynes and Milton Friedman.

24:07Please hold your applause, everyone, as I read the graduates' names. Aaron Aronson. Abel Aronson. Adelaide Aronson. This message comes from Superhuman, the AI productivity suite that gives you superpowers everywhere you work. With Grammarly, Mail, and Coda coming together, you get proactive help across your workflow so you can outsmart the chaos. Experience AI that proactively helps you go from to-do to done faster. Unleash your superhuman potential today. Learn more at superhuman.com slash podcast. That's superhuman.com slash podcast. Zara Zebediah and Ziggy Zubholder. I think that's it. You may now applaud.

25:04Whoa, sun's getting low in the sky, but we still have to learn about the contributions of three of the most brilliant economists of the 20th century. At this point, many great thinkers were realizing that capitalism would need some fixing if it was going to survive. First up, the genius and bon vivant who reshaped economics after the Great Depression, John Maynard Keynes. We have with us one of his biographers, Zachary Carter. Zach, give us Keynes in a nutshell. Keynes established the basis for what we now call the macroeconomy, the idea that the dynamics that prevail across the whole economy could be different from those that apply to an individual household or business.

25:49And part of this is the observation that the economy does not necessarily tend toward any kind of naturally harmonious equilibrium in which things just generally work out for all of the individual actors. The active hand of the state is, in fact, required to ensure that things like everybody who wants a job can actually get one. Graduates, you may remember we talked about Keynes in our episode about the Depression. He had the theory that the government can fight economic busts by spending more money. And when we hear about government stimulus during, say, the COVID pandemic, that's John John Maynard Keynes, Guiding the Hand of the State.

26:31Zachary, it is time for you to bring the spirit of John Maynard Keynes back to life for a few moments to help him share his wisdom for the graduates. Welcome, graduates of Summer School 2024. Congratulations on completing an achievement that Keynes himself never mastered, the fulfillment of an entire series of coursework on economics. I'm sure he would be very proud of all of you today. He had a wonderful quote from the 1920s about what a great economist ought to be. And I'll read it for you now. Good or even competent economists are the rarest of birds. The master economist must be mathematician, historian, statesman, philosopher, in some degree.

27:16He must understand symbols and speak in words. He must contemplate the particular in terms of the general and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man's nature or his institutions must be entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood, as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician. And I'll leave you with that. Congratulations and thank you very much. Zachary Carter wrote the book The Price of Peace, Money, Democracy, and the Life of John Maynard Keynes.

27:55We now turn to the person called the greatest economist to never win a Nobel Prize, Joan Robinson. She was born in 1903 and lived 80 years. And here to share Joan's wisdom is Linda Yu, an Oxford University economist and the author of The Great Economists, How Their Ideas Can Help Us Today, in which Joan Robinson was featured. The graduates may not know as much about her, Linda, so give us the highlights. Let me start actually with one of her sayings, which I think says quite a lot about her. So she once observed, the purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.

28:36So even though she was an economist at Cambridge University, she certainly had, I think, yeah, just a different view of the subject. So aside from her pithy sayings, the reason why I think Joan Robinson should be giving this commencement speech, is because she changed our thinking about labor markets. She introduced the concept of monopsony. So we know the concept of monopoly. That's when there's only one business selling a thing. They control the market, can set the prices for consumers. But monopsony is different. What was Joan Robinson writing about when she talked about monopsony? It's the same concept, but for the labor market.