a professor of economics at the new york university here in new york finney and if i may say so he is one of our two if not perhaps the leading expert in terms of quantifying to disparity of wealth and income in the american and world societies and the economics which are so important to the operation of the geological and political just for which the whole planet is trying to move ahead but what you mean when you say  italics we couldn't solve the technical problems but they can be only one major new paradigm because a paradigm is something that has to fit the fa it has to resolve all the information has to rest on the reasonable assumptions it has to make sense and the likelihood of that being to substantial view encompassing a a wide scale sense accepted from the historical model is that sort of what we need a paradigm is one of those words used a great deal but maybe it's good to get an idea a definition of what a paradigm itself it is a large body of  that perhaps also you know yes but so now what how do we what do you see using the economic binary economics what is it that you see maybe just you know in a bum no way what are the what is the component of the new system as opposed to what i would say two things in response st of all i think rodney is quite correct that in conventional economics it doesn't matter who owns the capital fact it's immaterial whether it's owned by a single person or whether it's widely distributed so it's really irrelevant to the working of the economy of the pattern of ownership but i would have to disagree that the conventional economics does give a role to capital in the production process at least in conventional neoclassical economics  fact there's a whole theory of capital services and the valuation of capital services and and the standard economic paradigm does place in the porton role on the action of capital in the production process well that is true but there is the question as to whether it really provides an accurate understanding conventional economics in his various forms on the left wing you have the council i see it's being controlled by controlled by a tiny percentage of the population on the right wing you have the  talking about this because he is he is the author i want to show a couple of books that you have here one is this one that he produces the book that he called which is particularly interesting it seems to me and then he's also the director of the review here it publishes the review of income and wealth and as i said earlier we should give it would get a little tighter on that but he said that he that he is perhaps leading a rd term to understanding the distribution and disparities of wealth one and income on the other and  call the hop heavy and he argues in this that there's a concentration of ownership and and wealth but maybe he is the best person that we could draw upon in terms of what are the facts in terms of on the one hand well for that is the ownership let's say non labor in general and by wealth we mean the assets that people own including housing real estate unincorporated businesses stocks bonds and so on the richest one percent of control close to forty percent of the total value of this in the american economy this is in the american economy and now if we look just at stocks it's even more concentrated the richest one percent o close to eighty percent of the total you have stocks in the country and the percent owned by the upper one percent by the right and if they're increasing a concentration as you get up into the percentages  one percent i mean the people at the top and i think we had talked to you in the past that somebody like mr gates has an absolutely incredible wealth for the rest of the society to where it's almost ludicrous right bill gates alone own as much routh yeah as forty percent of the american population we thought in about forty million dollars households or close to one hundred and ten million people so lord he alone is that's amazing and has it hasn't been this pattern that there's been a concentration of ownership of let's talk about ownership of well or capital assets that it would have beat would it be safe to characterize it as in a certain sense and that thing at being close on to or resembling something that could be called a plutocracy in terms of the ownership of well yeah ideas it's not an economic democracy it's an economic and have been absolutely i think marx was right on target when he talked about two distinct classes in our country the capitalist class the owners of the means of production the owners of assets in the working class which are people who sold their labor and really didn't have much state ownership stake in the means of production now but i should say that it's not an absolute thing and in fact  stock ownership has spread in this country in fact today forty eight percent of all households do own some stock but a lot of them have very small stakes and  common form is mutual funds ok so there is a concentration that you know we have a concentration of the capital ownership but most and if i'm not mistaken the basic policy grounding statement in the economic sphere is the employment act  forty six which has not yet been revisited as the communications act was to deal with the new information of the world revisited but it is still means that there will be a movement toward employment for it was almost called the full employment act and it is that we will distribute income to the mass of the people in our society by their having a labor relationship to production and to give great credence to the idea of labor input the production of the legitimate way for people to earn income factors even been if you have an earning from economic record you know your colleagues is there is there a problem there particularly to begin to is broadly suggested have more and more technological input to the production process through time well i think it i think you're exactly right that  the primary piece of economic legislation in the country does put the whole emphasis on labor income and labor activity and you know the notion of unemployment is that you not at work you know you're not providing labor and therefore getting labor income and so the stated goal is to make sure that everyone has access to the labor market everyone has a job yes so you're exactly right and and i think rodney is right to emphasize that nowhere in that document or nowhere really in most of the economic legislation in our country nowhere does it say anything about gaining access to ownership of these capital assets that is nowhere does it say that one goal of this country should be to make sure that not only does everyone have some form of labor income but that everyone has some form of capital income as well and that is a big distinction and an important one that the let's say the intellectual community at large or the socially responsible or concerned people ought to address in view of the technological avalanche of technological import to production now that is making this the time different than it was in time difference day when all there was a hammer and eight hours required to make a pair of boots i mean the technology and the capital assets are much more responsible for productions of the mismatch between the way people get income in the way things are actually things and services are actually produced well no that's true that capital has become much more important in the economy and owned by a handful of people and that still owned by a handful of people well let me qualify yes more people own some stake in that yeah but it still is concentrated in terms of ownership as it was twenty or forty years ago  t no you're right that nowhere in the legislation are nowhere in our conventional view of the economy to people think in terms of providing ownership of capital to a vast segment of the population and this is where i think binary economics has made a very important contribution to putting the emphasis on both providing labor services technology comes more and more to be responsible for the production and it is the reason it is the result it through the longer haul perhaps we've been around two hundred thousand years of the human species and the technology is increasing now exponentially it seems particularly in the realms of computers and so forth so that technological the technological input in a ratio with labor has changed through time so that the reality in a certain sense is changing so that our economic theorizing in the political  expression that would follow up on that would want to have some sort of a change that would be in keeping with the changes that have occurred up to this point yeah i agree in fact the recent trend has been for capital income to war more important relative to labor income the show and share of capital income in total national income has been rising over the last twenty years or the input to production on the side of capital on the side of non labor aspects to production has increased tremendously to where rodney answer some people i don't know how we get measurements of that but it's there where it might be seven thousand and eighty percent of the actual production is something other than labor but we distribute through the folks to everyone in what happens in the room while old and then to say that in a bind of economy he can be expected that the income going to capital would greatly increase but secondly the existing thinking is i want what you say right or things were established right in terms of the institutional structures and the relating of the folks to the way things are done then perhaps seventy percent of the income for people to live to buy food and shoes and so forth would be coming from something other than their labor and that's far from the case now that most people relate to their labor income is that by which they can make their way in the world and that would be a very serious matter well you would expect in a binary economy there to be or the technological systems of production are coming at such a rapid pace now that the labor import that we put such stress upon now we're heading for a we're heading for a train wreck here because we don't have an open the way disturbing incomes that make any moer you know well i think the role of automation might be a bit overstated human beings are very ingenious species and they always seem to find a way to make themselves useful in the production process arguments that that humans would become obsolete just like horses did when when the immobile was invented it became widespread and that just like  horse population decline dramatically in the early part of the century in terms of its role in the production process anyway so would human beings decline in activities that seem to still require and probably will always require some kind of human input yeah it's really hard to profit to posit a positive situation when no labor is involved all at once in one fell swoop it wouldn't happen like that it to address the question of one is that it that it's a problem in that we don't address it adequately and we don't have an alternative way our systems and our our system of organisation our structures our architecture our institutions are all predicated upon assumption where that is this the glue that holds the social order together so it could be that it's as threatening as the the heliocentric view of the universe was to the means by which people got seeming differences and so forth but in this case we would work with vociferous leave to try and maintain the old order which is fighting a movement which is larger perhaps in our efforts trying to hold it together because we don't have the intellectual to deny it and i think it's even deeper than that because people do get their identity from their work indeed that is what so it's much more of it's much more than simply a source of income it's really deeply embedded and in our consciousness of self and for anything that would threaten that like a thing called binary you can now make analysis of the way things ought to be organized and a political person leader or something who might want to take that it would be a tough fight against the embedded institutional system and the way by which people get it then to be so it might explain why there's been intellectual and otherwise some resistance to the ideas that are contained in your paradigm that you and arise that are if there is this productive capacity i happen to think that it's already that to solve the world's problems here at this moment right but the potential  were approaching a point where we would have a technological capability that made it possible for us to see in the abstract that there were in fact a dearth of our ability to provide life support as you would call it more have than have nots in the world that he said they posited that we were crossing that monumental divide back around one thousand nine hundred and seventy and potentially would have six blowing in the wind that there would have been more there we would have the ability to provide there would be more of the more than fifty percent of the world population on assistance to be seen to be haves as opposed to a historical situation where the men ever thousands of times more have nots shall than have always but we've crossed that line so that we're transcending the the ironclad rules of scarcity which seem to be the basis of much of what you cannot be thinking is the allocation of scarce resources and is a problem that we're coming to a situation where our technological success has rendered us in a situation where we have non zero sum possibilities because the  situation we have this abstract capability but we don't have a financing or an economic system that lets us do what we're capable of doing to serve the human population and it's almost built in schizophrenia i think  and add say the problem the world isn't producing food it's a political or economic problem how you can get into this new do these don't just and that there's a great pent up demand among the mass of the people of the world but they don't have the wherewithal to buy which can be automatically almost also said that there was never a famine in a democratic society interesting i think a point was it's political the political apparatus that was largely responsible for if this was the case why is it that we have allowed such a thing as such a plutocratic concentration of ownership to apply in virtually even an article i mean which we call a democracy much less and it's a pattern for much of the world you know twenty f and get their status in different ways in the eyes of others but i accept its point as things are at the moment and if people lose jobs all outside the conventional job structure they may have and they may well be perceived in a negative way by other lives and we just took a terrible ride on the on the nasdaq the other day with up and down like a road those are coney island and it was very you know upsetting in that market very uneven and whether or not that business cycle could be any way brought under some sort of a you know a more reasonable context but how out what what has been lacking that why and then if this is the case that you you would be the sense arguing that we don't have open entry in terms of open entry to capital markets no such thing and the idea that you know you have to take some savings and put it aside and invested in if you do and you watch it carefully it will grow and why haven't more citizens availed themselves or why have not more citizens been able to avail themselves of access to cows the options you know stock options and other kinds of things that our leadership did that made them so wealthy why haven't more people just done it is the normal flow event there's a great untruth mass of rhetoric is is is is devoted to assessing that  practice on not able to participate in the capital markets you cannot have a free market why can't they what they can't because the essence of the thing at the moment is that they're not able to  the key thing for investing which is collateral they haven't got anything left over from eating putting food on the table to invest they just don't have anything left over a large amount of caps investment is done by the use of credit and people barely manage to maintain their consumption with what they earn so there's really nothing left over to put away in the savings account or let alone to buy stock yeah  and over time those who who have it you know for whatever reason and they're the ones who are able to expand it because they don't have to consume it so any income they get from it so they just reinvest it and that's how it accumulates over time yeah and they would have collateral that could be put for that they wanted to go to a lending agency or them thing or and they would be able to put themselves on the winning side of the logic of business finance which is we make an investment today which will pay for itself out of its future earnings and if it doesn't it won't it's not a good business investment they can take advantage of that and have their their reservoir of money just growing more and more all the time because they have the ability to tie into that and the folks don't yeah i mean i think of as rather he indicated that if you have a lot of money then you have collateral and you can borrow and expand it even more have nothing then it's almost impossible to borrow from and there's no way literally no way to to start the ball rolling and start that initial accumulation which which then leads to greater and greater wealth over time what would be i wonder if you have a summary of that or what you feel or what would be if it's important what would be institutional changes or thoughts that could be introduced maybe within the electoral community or otherwise that would make it possible for there to be instead of just accepting that idea that the situation is such as natural law or something that the poor will be poor and the rich will get richer and richer accepting that that there would be something that could be done that would irrigate the economy and get past the dilemma as a stand in the way of the democratization of capitalizing on the economy what changes could we begin to think about do you think that might help us get past the con homeownership in our history and perhaps in the history of the world just by providing credit to returning veterans that was the demarcation of office homeownership rate in this country crease by almost twenty percentage points which is really really quite remarkable so i mean those are those are two examples of public legislation that that  the laws of war that would have made homeownership more possible to greater numbers of people as another example that would have been a policy that the be adopted to ban or an example that we could draw upon in order to try and get at some of the ways in which we might in least in the united states really the key factor is owning a home yeah it hasn't really been the major way people have achieved started their accumulation of wealth to get into the upper middle class a little bit yeah and you see once you right after world war two you know went from forty percent to sixty two or sixty three percent yes you know that was a very expansive time when there was you know how do we account for this and what does it tell us about the larger issue that we're trying to address of how can we think about not only homeownership but let's say democratization of access to capital credit that could begin to get the folks in the logic of business finance and the way the financing of our ongoing and forward moving here you know stock option plans for example is a very potentially potent way of further expanding ownership in this country now it's another aspect well binary nomics implemented would affect the income and wealth of all people including people but it's wrong to bring out the particular aspect for four women because it might that you ought to be able to address the idea because you had great thought about how we ought to think about some sort of a wealth or a taxing the wealth in order to distribute redistribute i guess it would be through the through through government systems and that we traditionally have done in the name of social welfare or social democracy or something and what about you know well yes i have proposed a tax a tax on wealth as one way of trying to reduce this tremendous concentration of ownership in the country  and i think though that the only that the other side of it though has to be tied in with it simply taxing wealth of the  united states is perfectly just unwilling to do that so you know what we do have some polyphony we're looking at the whole humans and i or the federal or the national system here we do have political institutions that have some say i mean it seems to be sometimes that that the mutual for the core of the fun guys in the corporate guys are just walking the planet with big league boots now and so what and the government is in the office at the end of the welfare as we know it mr clinton said in these kind of thing but it is the political power that the represents could be used for some purpose and a political the political federal structure would be important in terms of setting up an institutional framework that would fill a gap that has made this this democratization of capital ownership not possible in the past rodney i mean there is an idea of a reassuring capability of the government that have to back up and come from or growing commercial insurance again binary loss and binary stock issues that would be something like that that taken by that i'm not sure exactly what approach but that bill's working was there and they said it's almost certain a passage because there's wide acceptance of it but that seems to me to be a good sign a sign that it's encouraging you know i mean if it's moving that way but when there's a lot process involving capital assets and it could be insured against the law that in a way that they can't do because they don't have the collateral so it restricted to those who are already wealthy dress to be some way to get through past that that's a big hurdle but that it but it's also would only be called for if one could understand that there is a change that is needed on a large scale rather than just drifting with the times which is the default position of most of our political leadership is seen people at many off the probably even more considerations as to whether the investment will pay for itself in the bottom economics well as it stands now the investment capital the very few hands and that's and that has certain kinds of consequences easy to drift with that and to become s institutions of people having the job thing and so in order for there to be a change in a paradigm sense it is one that does call into question ideas that would in a certain sense called for major change and you would have to have some notion of what has changed that makes a major change possible and i think it's possible to do you know just nominate this era as one in which we live in a time of expect ocular changes going on and does call for some new thinking  and investigating new thinking and not having closed eyes and blinkers on terms of coming out of the history i mean down think will i i think i think you've hit the nail right on the head that we're now in the new era people call it the new economy and i think labor will probably get progressively less important over time room and that we have to think of ways to expand capital ownership in this country and plans particularly within major companies i think that would also be a very effective way to to expand capital ownership and dilute its concentration yeah right and also it could it could be if we haven't got our running out of time but it could increase the capital formation capability we have to do which perhaps we're technologically cable doing don't have a financing system that let us do it and it would also give a greater demand we didn't get a chance to about b congratulate you and and we're and and bob ashford for having come up with the book and of course we give tribute to louis kelso came up with it and edward wolf i really thank you very much for all your work on work at you know the word wealth  disparity of income and wealth in the world in this country and i congratulate you on and appreciate very much your coming in talking with rodney shakespeare and saying you think this is an idea that might be well worth looking at by greater numbers of perhaps of your colleagues yeah absolutely ok thank you for having me not at all my pleasure and it's been your pleasure to have the perceptions and again if i could on my far left dr edward will he's at the star school is at the top school of business just just new york university well if you know it's a really good business school and he there and he's it  shakespeare co author of the book binary economics that we've been happy to discuss here and we thank you both very very much for coming in thank you and we have conversation invited to it will be coming back again next week that's it for this particular segment of conversations but discuss must be based on well it's an interesting i like to nest it with some others you know like fuller and mcclure and some of the others and that sort of thing the but the binary thing it seems to me when i get around to thinking about it is the it's not the designers not the technological capability we have it's the financial system that is fine in terms of the really involved humanity in this technologically or in the system it's a big challenge to me that you credit leading intellectual challenge because it's