page. >> good morning, i'm senior fellow at the heritage foundation. our subject today is it humane to be a socialist. highly relevant subject it is. today's cent the fifth in a

speaker series we call free markets the ethical economic choice. it provides a moral and ethical critique of socialism and makes the case for the moral speariority of a free economy. i want to bring to your attention the next two event in this series on november 15th, george guilder of the discovery institute will give a talk called capitalism is an information and learning system. and on november 30th, mike monger of duke university will give a talk if poverty is the real problem then capitalism is the only solution. i would also like to bring to your an event that's not part of the series on november 16th, gregory may will be here to talk about his new book, jefferson's treasure how albert galten saved the new nation from kent. galten i think is a seriously underestimated figure the -- reduced the national debt by

half. reform -- he was sort of a one-man omb and funded both the louisiana perch in 1812. he was jefferson's and madison's secretary of treasury and their answer to alexeneder hamilton and it's his statue that stands at the front of the treasury building. it is my pleasure to introduce our speaker today, dr. deidre mccloskey she is a defender of free economy in the united states today. since the year 2000 dr. mcclockky has been a distinguished professor of economics and communication at the university of illinois and chicago. trained as harvard, as an economist she's written 16 books and added in seven more and published 360 articles on the economic theory, economic history, in front of use, feminisms ethics and the law.

deidre mccloskey has the challenging task of teaching me -- theory while a preference of economics at the university of chicago. she was also a professor of economics in history at the university of iowa. deidre mccloskey's many books are unusually well written particularly when the comes to economics, whichasm she's written isn't always a discipline that has the very finest writing. although lawyers do pretty bad too. anyway, spending time with these books is always deeply edifying and a genuine pleasure. and i want to bring a few to your attention. first, the "bourgeois equality" three books written over ten years. a series, three books.

and the first one virtues, ethnics for an age of commerce written in 206. these book argue that new ideas are the explanation for the great enrichment from 1800 to the president. liberty and dignity for classical liberalism. led to an explosion to trade-tested betterment. she argues that material explanations such as capital accumulation or exploitation were mistaken. in a modern restatement of ideas explored originally by adam smith and his theory of moral -- he makes the case that a virtue ethics celebrating bourgeois is sound and central to our society. other books you might find of value. the cult of statistical significance. how the standard era costed us jobs and lives. the rhetorics of economics. knowledge and spur situation of

economics. if you're so smart the narrative of economic expertise. second thoughts missed and moral of economic history and last but not least the applied theory ofplice. we use the applied theory of price in mimeo form in chicago. it's now available online for free at www.deidre mccloskey.com for those who would like a good price theory book. and if you haven't read this book you should. the core analytic power of economics is price theory. after her presentation we'll have time for audience q and a, and a copy of her remarks or at least an outline perhaps is a better term will be available to anyone who wants it after the event. please join me in welcoming deidre mccloskey.

[applause] thank you very much i have a speech defect which you'll have to grow accustomed to or run screaming from the room. it's still a free country even after yesterday's election. >> deirdre: i had to make a joke about the election. that price theory book that you speak of i intended to a third in addition of -- when i get the time from the other things i wanted to do. and among the things i want to do and is the one of the core ideas in the trilogy that david mentioned, is to undermine the attractions of socialism. now, socialism is attractive but the title of my talk is socialism is ethical at age 16.

not at 26, or my own age, 76. and when i was 16, as a child of a harvard professor therefore upper middle class, by birth. i was socialist so to speak. somewhat unscholarly one. it was the age of folk music that i was a -- i call myself a joan bias socialist. i dreamt i saw joe hill. the old joke is that someone who is not a socialist by age 16 has no heart. someone who is still a socialist at age 26 has no brain. now at age 16w the background that i had, socialism looked and

you could say was ethically defensible. if you grow up in a family and i take it everyone here did, you grow up in a socialist enterprise. the mom is the old traditional family which is thankfully slowly declining. with the separately planner, and indeed had her own homework for central planning. my grandmother could make all the girls clothing, could cook for 40 hours a week, everything from scratch, so there was economic production in the home which she did and then her husband went off to be an electrician and an electrical

contractor and the people in such a house and certainly in mine were my father would go off to the office and do god knows what and then come home and income was fall like hannah on the houseple hold. that background makes for socialists. it's still more for people like me who haven't done honest work in her entire life. i've been in an academic life, i was good at school so i stayed. if you go to college and live in a dorm as i did, and then go to graduate school, live in a dorm as i did, and then get married, and then you have a central planner to take care of you, and then you if you particularly if

your field is english or history as mine sometimes is, you're going to emerge at age i don't know 27 or something at someone who has always lived in family. and your going to view the market as a very strange foreign intrusion on the idyllic scene of -- from each according to her ability to each according to her needs. now, of course if you grow up on a farm as very and very few americans do now, 1900 over 80% of americans were on farms. now it's about 1%. then you know where meat comes from. and you know as we say the value of money. you know that your parents worry about the price of hogz or

sobeans. or if you grow up as some of you surely did over the shop, so to speak, with a small business in the ground floor and apartment upstairs where the family lived and you worked as a child in the family, or if when you're a child you had a paper route, or something like that. there's variation in the organizationest paper routes i learned the other day, and some of them are more entrepreneurial than others. and some the size of the newspaper. so, it's no wonder considering that those occupations those families are declining in weight in the american economy. most particularly agriculture, quite enormous.

that socialism survived in people's minds. young people's minds especially. and david and i were speaking earlier how strange it is and on tv you see kids being interviewed and i say earnestly and they're not bad people they're just saying earnestly, i think we ought to try socialism. as though socialism hasn't been tried. let's change the system. people are always saying. which is my own experience with changing the system is -- it doesn't work. one version of the golden rule is those who have the golden rule under whichever qhawrve system we have. it seems to me i wonder if you

agree, that one's political convictions tend to freeze sometime in one's 20s. and most people acquire their politics in their early 20s and then don't ever change. so bellow remarked once as a youthful adolescent -- he was more scholar than i was about trodskiism, he found it very hard to shift as he gradually did to be some sort of conservative. and so far as the ethical questions concerned that we're dealing with here of course the age of reason and the age of

reason in each of our lives, we're supposed to use a reason. and it's decidedly unethical not to in thinking about the politics that we're going to impose on our neighbors. and it's striking in my experience being once the socialist, now a free market advocate i call myself a humane libertarian or a bleeding heart libertarian or a christian liberal. it's striking that my socialist friends resist reason. regist the reasonable claims that this book that david plans

to come out of these speeches have the claims of reason of socialism. they're the claims of sheer experience that would be historical reasoning. the people who advocate socialism now i'm kind of saying that we're bernie sanders and jeremy corbyn both of whom are about my age, we shared the same views in 1960. but they didn't change since then. you hear speeches by bernie sanders and they sound like 1960s socialist. and it's striking they haven't learned from history at all. jeremy corbyn, my friend the

economist, praised issue stress and now maduro in venezuela in the coverage of the venezuelaen catastrophe it's quite notable that the journalist again innocently, i'm sure this is not a conspiracy they're not bad in that simple-minded sense. covered it as a national disaster as though a hurricane had hit venezuela and for some reason you couldn't get any food or medicine at the store. and for some reason you had to take wheelbarrows full of money to buy bread. if these socialist friends of mine are -- and most of them are, and most of us since the

1890s have an at least -- i've noticed reasons resistance to my three wonderful books which are available on amazon.com cheap and even in spoken books so what are you waiting for? [laughter] our have a marxoid theory of history. which is that the history of all hitting to existing societies is the history of class struggled. when i read that in the communist manifesto i thought great, now i don't need to read anything more pause now i have the formula. some would like the formula in economics, that marginal cost equals marginal benefit. but so we're all in a sense for about a hundred years we've all been uninterested or not un-- we're unpersuaded by the force of ideas the independent force

of ideas. what's strange about this fact of intellectual history, especially in the west, is that the people saying it, saying i do -- all that matters is interest, my formal colleague george spinningler at the university of chicago is among those. and murray rothbering, another acquaintance of mine and i called them both america's leading vulgar marches because they talk this way all the time. that it's interest that determines ideas. when they themselves were -- they themselves were making speeches just like the one i'm making now. there's something strangely inconsistent about this materialest preparation. but my other friends to get back to that, are they walk by the

evidence. the evidence -- the circle evidence the economic evidence. i think one reason for this is that the progressives to cover them all, assume that people like most of the people in this room are evil. as look to your left -- look to your right there is an evil person there. which means that you don't need to pay attention to what they say. why pay attention to hitler? extreme case of this is the egregious professor nancy mcclain of duke university. written in the resoundingly ignorant book about james buchanan, a great liberal economist taching him for no

good reason. she didn't interview anyone she just wanted to attack him. with theories of racism. or charles cook for whom i've worked. i'm the enemy. she has a rule actually which she articulated this year, which is that nancy will not -- she's a historian in the history department. nancy will not speak to anyone who is accepted cook's money. and indeed she won't speak to anyone from any university which is accepted money from charles cook. now the problem with this is that duke university has accepted considerable amounts of money from charles coke. .

. >> and with that option.

after they have put away their natural and childish emotional toys is a piece of sociology that i wish some sociologists would find out about. and with that trilogy of the rise of income per head have what you would call historically liberalism with the free markets and free

minds. and that increases by 3000 percent. and indeed with the income of the poor there is a lot of anxiety and inequality but in fact, from that gigantic increase even well informed people or employees of the world bank if you were to ask people like japan or the

united states? even well informed maybe 200 percent? but it all goes to the rich for when they had nothing. or their apartments and air-conditioning and refrigerators and excellent health care. and back then were going to the doctor was very dangerous. that's 100 percent or 200 percent? it is a factor of three.

to explain to a eminent anthropologist and then to say afterwards i agree with you but this 3000 percent is wrong 30 minus one is 29 and then divided you get 2900 as a percentage.

but that fact is extremely important you should really grasp this with your head and your heart and the free markets that have increased by 3000 percent and is good for the entire world. that's why sub-saharan africa cannot be as rich as the united states. and as indeed the cases show very plainly as a beginning student of economics without the distinguished teachers of harvard and then the other

problem is they are all hindu. it is hopeless but in 1878 and then starting to introduce and then they start to do those things with five or 10 percent per capita. but essentially it was 0 percent with five or

6 percent per year. and the argument is and i use that phrase not in contempt but i do talk to them. and to say it was caused by the government and it worries me but i go through those arguments why. so for example, have a colleague as a labor historian the eight hour day was not caused by laws but struggles

and he was even startled by this so what more do you need? but of course, that's not true. because people don't want to work more than eight hours a day so for a long time the standard workweek froze down to eight from 12. it seemed like it was frozen but i continued to go down. because of retirement, school,

retirement, school, the amount of time they spent working wasn't because of the laws but the activity of the economy. so indeed the effective welfare state takes quite a while to merge because of the right to vote as the economy gets more rich and to afford a welfare state.

but the job of this is to extract and give it to the workers. but one labor law after another is entrenched in the economy the only way workers will get better off is by going after that goal. wages are determined by the late 19th century the amount of evidence of that using the word overwhelming that is

gigantic. why did this happen? if we are going to be convinced socialism is not the way forward and with capitalism it is a very foolish word. but not since march did they exactly have capitalism over the years so the modern history of the economy is with the accumulation and i have many other friends but

although the capital is necessary with the rule of law for this 3000 percent. think of that. with the ideas. with capital and the rule of law and peace and we need to

ponder this. and we need to focus on what is important which is a society which ideas flourish. and the austrian economist of a social engineer and these are the discoveries together the entrepreneur reticence as she walks around.

the idea of cameras that have to be much larger than it is in the idea of projectors that depends on the bandsaw. and to the steel that makes up the chairs with the idea of a think tank and to have an idea and in 1956 with a

standardized box with 20 feet long that can stack on top of each other and to have 10040-foot containers per ship at the highest 10000 special containers. 40 feet long which radically reduce the cost of ocean transport. at the same time of course, balk carriers got larger and larger and from the

modern university. to combine research so the ideas are not necessarily so i keep altering that phrase to be commercially tested but the profit is a tax and that is a

brilliant passage for economics and said let's just suppose that is then to call out the enterprise. of that 20 percent of income that that tax of socialism so

which system do you want 15 or 20 percent so this is commercially tested for the betterment for a reasonable good. that is common in all cultures

and then who says to everyone else that the betterment but then and i believe that. actually started to call that hedonism. but actually i would be a socialist. but you are wrong.

so with communism or the soviet union such as that high-level stuff in the containers on the ship ray croc started small. so did bill gates. not so small actually. the ordinary people having a goal. the woman who decides to work

in the neighborhood where did this come from? so it has always been innovative to some degree but in countries like england and france in the united states or italy or japan how did this happen? and then from what adam smith calls the simple and liberal plan of quality and liberty and justice.

with the quality of social standing and liberty to invent the internet and equal justice. it is the egalitarian of this liberalism i went to look at these traditional concerns that don't believe in quality. not french style inequality after the event and then equal

rights so you are supposed to know this kind of thing. even though it works in other societies but to say i paid for that i should get most of it we would want to do that. that all things are held in common that was always the

first one because i want practice some in the great society and was complaining by

correspondence thought the messiah was about to come again from the fourth century on? and with this off - - apprehension? it is at sensibility that you should know with business to manage it. so what then?

so those are the virtue ethics and you can find pieces of that with confucius and also abraham make and there is an old joke and then naturally.

with prudence and justice and courage and temperance and faithful and love there are other ways for behavior not those abstract rules that became unsurprisingly popular but can with the justice

elevated and with prudence but as adam smith said because that great guide to behavior should be the virtues but if all you have in your heart is justice you will lack love if all you have is love you will lack justice. so i have a summary of how

these turn out with the liberal abraham make promise you can bet on the first century that you would not have them do to you. and that is the libertarian it is masculine so to speak. leave me alone. don't tread on me. i have autonomy.

then to measure that to do unto others what you would have them do unto you. so i don't want to make the existential argument here but to be a good samaritan be nice. and i think we need both. i think in a socialist society reminds me of an old joke

someone said to be and to do is descartes the next person wrote to be is to do in the third person said do be do be do. sinnott tropical that is about right. to be and to do to be the kind of person we need to live in a free and responsible society that everyone should advocate. thank you very much. [applause] . >> please state your name and

institutional affiliation and try to keep the questions brief. >> i have two questions. first i have two questions. first my first question is the flaw of socialism and what is the cause of that flaw is the notion that the economy can be run from the top down this is a point that when martha hamburg retires from the fda

she was interviewed and the reporter said with apparent delight that she had been in charge of 20 percent of the american economy? one person? yes. food and drugs. it is a persistent error that the economy is easy but it's easy to do we don't need discovery we don't need to work. what is the second question? by just a follow-up why is the theory wrong of the top down economy? for mac logically.

maybe perhaps in an alternate universe in which top-down management is fine maybe in the family that is how it is managed. top-down. the conditionality was the mandate to be father of the nation of course, the metaphor that goes everywhere is the source of the problem they think they can apply that to the whole society and in the essential ethical point of view to be pretty sure that she does but but anyone with any experience knows the family cannot run very well think of your offspring or children think of mine who

haven't spoken to me for 23 years. >> it is proven wrong because there is no logical proof. it is a fact that's why it comes with maturity in the case of bernie sanders and that's okay. or reading if you open your mind. so those at that socialist calculation they took up the challenge to get more computers to get smarter and smarter at the center to invest i have a colleague in

iowa who was asked to go to advise them on transport of agricultural goods he said we have trucks and grain elevators ships and barges someone said but those in charge? he said no is in charge. and then they stopped believing him. they thought he was hiding a state secret. . >> i work for senator ron johnson you use the term in over them - - innovation but

what is that feeling that somehow they could be protected from somebody else that will disrupt them? . >> absolutely true. it is evident yesterday and in the appeal must me what sanders and trump agree on for protectionism and i understand that the disturbances that is called creative destruction that they borrowed it from someone else with that phrase , that comes from progress not

from liberalism or the chinese trying to sell us cameras and expensively. or mexicans or auto parts. it doesn't come from those but it was a socialist calculation debate and the central planner with the chinese and the vietnamese and the japanese before that to specialize in low-wage industries the central planner under ideal socialism so it's progress they are objecting to.

not neoliberalism this is very clear in hungary where hungarian agriculture is not a good prospect for the future. so despite enormous subsidies it's not doing very well. so you get support for fascism which is just another form of socialism. it's very depressive. >> i am 22 do you think the free market and socialism and those ideas like universal health care they are mutually exclusive? . >> i don't think so. i think education is

subsidized by taxes but of course, paying for it is not the same thing as providing it. as you know, there is a deep confusion about this people say you have to have elementary education. all right and i'm willing to be taxed to provide it because i don't think poor people will do enough if it's not free but i want it to be free. the same thing holds in a more radical way that whenever you speak in a comprehensive term about socialism you say look they should have a smaller government don't you want roads now i can imagine a world suddenly all the roads disappear and i say i want roads but provided privately as they were in the united

states and britain in the 18th and 19th century and then a way to make a very dissertation in history interesting they became defined as public roads a piece of socialism but now it's trivial for them to be done privately if you put a transponder in your vehicle if you can pay for the roads like you pay for your gas but it's very hard to get people to change there is a proposal to meter water. this has become an immense political issue that they say to hell with us i want to run

it 24 hours a day go away as much as i want. that is the ideological battle that we need to win. we did win once henry david thoreau wrote a sensationally good biography and i cannot remember her name from the university of chicago press read it. skip the first chapter on the geography of walden pond. [laughter] but he said i support the proposition that government is best that governs least. he was not a socialist.

>> i am with heritage at that it was very interesting what you have to say about the nuclear family and its impact. i also want to know if of all truism do we come with the over experiences tempered by actual careful experiment humans are unusually cooperative. there have been many, many experiments showing this like chimpanzees are the nicest of the two and gorillas we cooperate all the time. and this is in line with language i think but we need to convince people is the specialization of the property

and the outcome to result in massive cooperation i didn't finish my tale about buying my accordion i forgot to give you the punch line which is about this accordion from czechoslovakia it is a beautiful instrument i just wish i could play it. what i'm supposed to make my own accordion? the logical production of protectionism of any sort is okay let's protect illinois with their barriers or chicago or my own house then i will have plenty of jobs. so yes, cooperation.

here is another version of that point you will always here enterprise is called nonprofit enterprises identified as nonprofit that there is something virtuous a presumption of virtue unless it's called the heritage foundation of a nonprofit institution but come on. this system of markets is the most altruistic ever designed. people do work for each other incessantly i get very annoyed of the current talking about admiring military people for military service they do it on msnbc as much as fox news. thank you for your service. what are you talking about?

somebody who makes toothbrushes is doing you a service. stop it. >> we don't want to ignore the left. [laughter] from competitive enterprise institute thank you so much for being here. >> glad to be here. >> talking about innovation and in your writings what changed like the 19th century and early 20th century with innovation and one for nomination the way society views the innovator instead of the crackpots now they were visionaries. what do you think was responsible that you thought you could still get a progressive admiring steve

jobs to redistribute his wealth but they admire the pension and the innovator? . >> that characteristic figure is benjamin franklin at age 43 became the most successful printer and then became an inventor. he wanted to be a gentleman he wanted to climb the existing hierarchy. it is the change of attitude that matters people have only read the titles of my books is actually the first of the trilogy they think that i mean

there was a change that people became more virtuous in the 18th century. that the same way they feel if they haven't read books on economics. but i am saying there is a change in social etiquette evidently you haven't read the third book of the trilogy go get it. thank you dear it says the causes were accidents in europe but nothing about europe my argument is not that so many conservative friends went to make it a story of the deep superiority i call them

ellen and challenged people it's not about the innovativeness the most innovative society in the world had the best ships and agriculture china. so it was the accident also bunch of accidents, not just one the dutch revolt against spain it was successful the english civil war of the 16 forties and the 16 fifties.

and the great revolution in the american revolution and the french revolution all of these made ordinary people bold but protestant is in a is an isn't mine it is anglican. or the reformation with a hierarchy in the church my priest is trojan --dash chosen by the bishop but still more radically coming out of the 16 forties in england with the society of friends or the quakers in which no one is the minister and women are allowed to speak. one after another the dutch of

the 16th early 17th centuries this gives the idea they can have a go. and having a go is crucial. who is next? . >> i am retired. >> thank god. >> it's nice isn't it? [laughter] but to get to your definition of socialism because as i understand it in capitalism everything is owned by somebody so capitalism feudalism everything is owned by one person. with capitalism if you own a house and step off your property or on somebody else's

you don't have permission to use it and as soon as you have public highways then you are a socialist. >> so right now there is a mixture of public and private property. >> i agree. >> everything becomes community property that is communism. >> communism is the last stage. >> but everything is publicly held by the communes and in the states of communism everything is owned by the state and is controlled by one person. it's feudalism not really communism so the soviet union wasn't really communist it was feudalism. >> i agree.

i don't actually agree with your analysis but there are elements that i do agree so getting back about the accidents of europe was feudalism that it was owned by one person that's what i want to ask you. >> here is the key point people don't like the word capitalism because they think it is a stage of history and that is wrong. ownership of property in markets are pervasive in human society and always have been. one of the largest archaeological sites from south africa and at the time in that area where these

people live was 100 miles from the seashore but yet they found that 70000 b c a necklace made of seashells they didn't get it by walking 100 miles there and 100 miles back they were trading with those that would walk to the other hunter gatherer area. that is one of the earliest but there are many others evidence of trade. so not true exchange of property because property is characteristic of some species of butterflies will take up in a sunny area of a forest and defended against other butterflies.

property is commonplace in the animal world and the virtual world so this idea is something new that is so-called capital - - capitalism is wrong. but what is new is the incredible amount of innovation that's what we need to explain not the stages of history. >> we have time for one more question. >> thank you for your time. i am with the institute for human studies and and the economist the political philosopher recently has written about extremely capitalistic places like california tend to overestimate their virtue and

they vote towards more social policies so can you talk about that and what effect that has on the economy? . >> all we can do we cannot send them to a - - education camps we cannot do that. all we can do is preach to them. and actually probably better than academics is popular culture. there is a great move me about the inventor of the self squeezing mop.

basically pro innovation at about the same time a very good movie about ray croc who failed the business over and over and then figured out you could take the mcdonald's brothers model of assembly-line production of hamburgers. i was watching the hamburger guide this morning i got breakfast at the train station. he was wonderful to watch but of course, he could not do the volume that the assembly line can and that was discovered. okay. more rock music with the free market?

i think country music is a really good place to look total innovation premarket you know, what happens in the country music when you run a backwards the guy gets his girl back. [laughter] and his gun and his pickup. [laughter] but in popular culture that is where the rubber meets the road. that is what it is and it always has been ideologies are formed in the culture. hollywood produces endless pro- socialist movies actually what is so absurd is these corporatist movies produced by

massive corporations with corporate offices it is ridiculous. >> thank you all for coming. [applause] here is a copy of the outline and one final reminder the next event in the series is novembe november 15. thank you again. [inaudible conversations]