Sapiens 13 -- The Capitalist Creed

See also these transcripts, posted by someone else who took Dr. Harari's Coursera course.

Lesson 13 - part 1 -- economic history and the rise of the capitalist system

• The most unique/important characteristic of the modern capitalist economy = GROWTH.
• 2:30-10:07 = a hypothetical example that shows how capitalism is based on trust in future growth
• "The secret, the magic of capitalism, is that it finances present expenses with make believe money that has no cover in the present and may only may have cover in the future. For most of history, the economy was frozen. It hardly grew at all. It was very hard to finance new enterprises because people did not trust in the future."
• CREDIT enables us today to build the present at the expense of the future, and this is what enables the economy to grow so fast. (unlike money, which is based on trust of something in the present, like the king/govt)
• In pre-modern times, credit was limited because people did not have trust in future economic growth; so, like a self-fulfilling prophecy, it was difficult for growth to occur.

 Lesson 13 - part 2 -- Adam Smith's revolution in ethics; capitalism and science are mutually dependent upon each other

• A new revolutionary idea:  GREED IS GOOD.  Adam Smith’s claim that the selfish human urge to increase private profits is the basis for the collective wealth and welfare of society.  Economics is a win-win, not a zero-sum game.
• Jesus: a rich man cannot enter the kingdom of God.  Smith: rich men are the best people in society. 
• CAPITALism is based on the idea the profits must be reinvested to increase production.  (Vs. wealth, which is wasted on unproductive activities; lots of wealthy people are not capitalists)
• It was a very strange and alien idea to most people throughout history. In pre-modern times, people believed that production was more or less constant so there was no reason to reinvest your profits in production. 
• (Other species don't believe in this idea of perpetual economic growth; wolves, for example, don't expect the supply of sheep to grow.)
• Connection between science and capitalism:  "The human economy, in the last 500 years, nevertheless, managed to really grow without limits, exponentially, thanks to scientists coming up with new discoveries and new gadgets . . . Banks and governments print the money, but ultimately, it is the scientists who have to foot the bill."

Lesson 13 - part 3 -- The link between capitalism and Empire

• Credit and capitalism were not unique European inventions.  However, pre-modern Asian kings and generals tended to look down on merchants and bankers, and their activities were financed by taxation.
• European expansion, however, was financed and driven by the interests of merchants and bankers.
• "The empires built by bankers and investors managed to defeat the empires built by kings and nobleman, because they had a much stronger financial base. It’s better and easier to finance an empire from investments than from taxation. Nobody wants to pay taxes, but everybody is very happy to invest."
• English, French, or Dutch empires were created and managed by private businesses, by limited liability companies.  The stock exchange could finance campaigns of exploration and conquest far more easily and efficiently than any kingdom or empire that taxed its subjects.
• 5:43-8:85 = story of the Dutch Company VOC that conquered and ruled Indonesia for 200 years
• Most British colonies were also established by private companies, rather than by the crown itself.
• Opium War, Britain vs. China (1840's) is a notorious example of the connection between governments and capitalists, government controlled by capitalists and looked after their interests
• Today's links between government and capitalism:  The success of a country today in the world depends much more on its credit rating than on its natural resources. Credit ratings indicate the probability that a country will pay its debts, determines its ability to borrow money.

Lesson 13 - part 4 -- The calamities caused by free markets (with no government regulation)

• Capitalists insist that governments should not interfere with free markets.  But there is no such thing as a market that is completely free from politics/government "because the most important economic resource is trust in the future."  And governments ensure trust.
• "If markets are not regulated, there is a very real danger that the powerful players in the market will exploit and oppress the less powerful in the pursuit of profits."
• TAST = the greatest crime of capitalism
• "Unrestrained market forces and not tyrannical kings or racist ideologies were responsible for slavery in European colonies. . . . This whole enterprise, the slave trade, was not controlled by any state or any government. It was a purely economic enterprise organized, managed and financed by the free market, according to the laws of supply and demand."
• "When growth becomes the supreme good, and it is unrestricted by any other ethical or political consideration, the pursuit of growth can lead easily to catastrophe."
• "Much like the agricultural revolution the growth of the modern economy might turn out to be a colossal fraud. The human species and the global economy as a whole may well keep growing and growing, but many individuals still live in hunger and in very difficult conditions."