The Future of Capitalism | Q&A With MIT Students

The first question from Anna Waldman Brown, and the question is, "Uh, hey, I'm studying automation with the Work of the Future Task Force. I'm curious how you disambiguate between automation replacing innate intelligence versus acquired skills/education. I.e., do you know of cross-national analyses that compare across different skill regimes?"

Well, you can look at the literature that examines the acquisition of different skill regimes, so how fast you learn, and that's pretty much identical with general cognitive ability. Once you've learned a skill, if it's automatable, then cognitive ability—IQ, let's say—IQ is cognitive ability adjusted for age and normalized basically. But if the skill is automatable, once you learn it, IQ no longer predicts how well you do it.

And so, you can derive a general factor of cognitive ability by looking at skill acquisition rate across any range of skills you can imagine. It's that general a factor. Now, whether AI can replace general intelligence, that depends to some degree on exactly how you define intelligence. You can define it as the first factor that emerges across tests of ability that require abstraction—that's a good way of defining it.

It isn't obvious to me that we have intelligent machines that fit that criteria yet, and then discriminating intelligence from consciousness, that's also a very tricky problem. So, we do have AI systems that can replicate complex automatable processes.

Right, the next question comes from Timothy McCormick. "For the first time since the Industrial Revolution, the population of the Western world is declining, and soon the entire world. Fewer humans mean the labor force will contract, and the price of all sorts of labor will increase. Capital means of production, in other words, will be in surplus while labor will be at a premium. How will this dynamic, where money will be cheap and labor increasingly expensive, affect capitalism?"

I think that that's far enough out in the future so that we can't tell because we're on the brink of explosions in all sorts of technology, assuming we don't decimate ourselves in the next few years. By the time we hit the point of radical population decrease, things will have changed so much that I don't think that question is answerable. I mean, obviously, one of the things that's going to happen is that our ability to produce quasi-intelligent machines will address the labor shortage to some degree, but it's too far. The time horizon's too expanded for me to speculate.

I don't even know what's going to happen in two years, let alone 20. I do think the population decrease is— I don't think it's a good thing. Everyone seems to think it's a good thing, except perhaps Elon Musk. I don't think it's a good thing at all. I think it's an indication that society has lost its way in a fundamental sense.

To see population growth fall below replacement—it hasn't happened everywhere. I mean, there'll be more people in Nigeria than in China by the end of the century, which is quite the stunning statistic. And certainly, the West is doing its best to empty itself out as rapidly as possible, but it's also Korea. Korea has an extremely low birth rate; Japan has an extremely low birth rate. It's a sign of the demoralization of a population, in my estimation.

So, the next question comes from Deborah Scalabrain Hollanda. The question is, "Recently, in the name of promoting diversity and inclusion, many companies have been adopting selection criteria that prioritizes individuals based on their minority status. What are some of the unintended consequences of these strategies, and is it possible to reconcile these goals with the best interests of shareholders?"

Well, it isn't just diversity inclusivity. Let's remember, it's also equity. And it's interesting that equity wasn't in that list because it's by far the worst of the three, because the equity claim is essentially predicated on the notion of equality of outcome, which is, first of all, impossible to define across all possible variables of outcome and would require something approximating a totalitarian state to ever impose.

People who think diversity, inclusivity, and equity just means we're no longer racist have no idea what system of ideas is driving this entire enterprise, which is also predicated on the idea that our implicit cognitions, as measured by the implicit association test, are fundamentally racist despite our explicit wishes. And even more preposterously, that those implicit biases can be modified by explicit training programs, which isn't even justifiable by the tenets of the theory itself.

And so, what are the consequences of implementing that? Well, I can tell you what's happening in the research enterprise in Canada, and this is happening in the U.S. too. You can't get a research grant in Canada, and all you MIT STEM types who don't have a political bone in your body had better be watching out for this because you're going to get steamrollered by the ideologues who have a way better grasp of political reality than you guys do while you're concentrating on your vitally important research, as you should be.

In Canada, you can't get a research grant to do engineering or hard science work unless you write a diversity statement. Well, now you've subsumed your science to the diversity claims. It's like—and here, let's think this through, okay? So, I've been an academic at high-level institutions for 40 years, basically, including McGill, whereas a graduate student, and I've watched hiring committees operate at the universities.

I defy anyone to find any hiring committees that have ever been established by anyone ever anywhere in human history that have been as fair in their application of the demand for competence as university faculty hiring committees. We've never done better, ever, than we did in the last 30 years.

And now we're willing to swallow this absolutely preposterous notion foisted on us by incompetent HR professionals who are under-trained, accusing us of an implicit bias that we can't control, that they could fix and should fix and have to fix, by the way, by the imposition of these incredible scientifically unjustified training programs.

And so, what's the consequence of that? Let moralizing fools run your important enterprises and see what happens. Now, I noticed that MIT, for example, dropped the math SAT requirement. Well, you know what, you guys? They're the greatest engineering school in the world. You know that actually turns out to be important—really important. And now you say, "Well, objective tests, they don't matter."

It's like, yeah, well, good luck with that proposition. So it's—I cannot understand how business people and academics, for that matter, who are perhaps even worse, can be so blind as to let in a fifth column essentially predicated on the notion that capitalist systems and patriarchal systems in general are fundamentally unjust and racist, and then to promote that as evidence of their open-heartedness and willingness to deal with racism.

It's beyond comprehension to me, and we will definitely pay for it. We are paying for it already.

The next question comes from James Camp. "Getting back to capitalism now, can Dr. Peterson speak to the emergence of stakeholder capitalism? Is stakeholder capitalism already priced into shareholder primacy given the fact that maximizing shareholder value also requires attracting the top talent, creating a sustainable workplace environment, addressing concerns with customers, and so on?"

Well, I've always had some trouble with the idea of maximizing stakeholder return because it immediately begs the question of time frame for me. It's like, "Well, over what span are you calculating that? Is it a quarter? Is it a year? Is it five years? Is it ten years?" I suppose if you're a pension investor, then that time frame matters, right? Because you'd be willing to put up with relatively low returns over a five-year period if you could see a company investing such that the returns would improve in the future.

So, I don't exactly know what maximizing shareholder value means because of the time frame problem. I would say, however, that despite the fact that that's problematic because of time frame, I see absolutely no indication whatsoever that the imposition of external ethical structures, say in the guise of ESGs, which basically are manifestations of stakeholder capitalism—that's just a proxy for centralized control.

The whole point of the free enterprise system is to produce a maximally decentralized computational system, and if you think you could subsume that to your utopian vision, well, then you don't understand the system or you overestimate radically both your intelligence, your ability to see the future, and your own ethics. Because I have enough suspicion of who I am, let's say, so that I would just as soon like to leave other people alone to do their own thing just in case I might be wrong and somewhat malevolent.

But, you know, if you're possessed by a utopian vision, we're going to remake capitalism to serve the planet, whatever that means. Then all of a sudden, all those other considerations, including that of your own ignorance, just fly out the window, and you have endless justification for everything you do because saving the planet is an emergency and also an ethical demand if you swallow the line that's so compelling that there's nothing that's outside of necessity and it's a catastrophe.

It'll be a catastrophe, in my estimation. And here it comes—you can see it, ESG, marching through the marketplace now. It's really—it's going to make diversity, inclusivity, and equity look like child's play, at least, because the centralized control isn't technically possible. That's the problem, right? I mean, can we agree on that or not?

You can think of the market as a giant computational system, and what is it doing? It's trying to reduce uncertainty as a consequence of trial and error at microdomains. So each microdomain is the individual purchaser, and are they right or wrong? We don't know. What we see is the system moving in a direction that's the sum of all those minute decisions.

And you think you can replace that with some vision of centralized top-down control? Well, who do you think you are, exactly, to make that claim? I don't—I would—would you replace voting the same way? Because as far as I'm concerned, it's a reflection of the same issue: the voters are picking foolish policies that will destroy the planet—it's like they're voting with their money in the free market.

Well, a related policy question that came up is this: What do you think of guaranteed income? Since economics is under politics, is it ever possible to justify this in a capitalistic system?

That I don't know. I mean, we do that to some degree with pensions, right? In some sense, that's already the experiment of guaranteed income. And are people relieved and happy to be living a life absent the demands of economic necessity? Well, the answer that isn't obvious, you know. I mean, I've seen lots of people transition out of the workplace into a life of leisure and then just perish, you know.

I mean, work is not merely what moves bread from the store to your plate and from the plate to your mouth; it's also, for many, many people, it's their prime source of the gratification that comes in engagement, skillful engagement in a productive enterprise. You could say, well, a guaranteed income lifts that burden from people, and I would say you could try that out very carefully, experimentally, at a small scale in multiple places and carefully assess the consequences.

But we have no idea how much striving forward is motivated by necessary brute necessity. You know, one of the things that wealthy people do—and everyone who has a plethora of material resources at their disposal wrestles with this—is how do you provide your children with optimal deprivation in a land of infinite plenty? And you need to do that because, well, they can't just be hooked up to feeding tubes that take care of all their needs.

You know, that isn't what life is like. So, I think the only way that can be figured out in some sense is experimentally, and there are no shortage of pitfalls. What you—one of the things you learn as a social scientist is that, first of all, you shouldn't do large-scale social experiments. That's a big mistake because your stupid experiment is not likely to go the way you think it is.

And that was really well documented in the literature assessing large-scale interventions to try to ameliorate antisocial behavior in children, some of which made it much worse, you know, with all good intent there. And having implemented programs that everyone, regardless even of their political belief, would have thought were positive and beneficial, things go wrong for unintended reasons.

That's part of the conservative ethos, let's say, but also the ethos of any intelligent social scientist. And so you might say we probably also decompose the problem. Do you mean a universal income for everyone? And then how much of an income? And then when does it start? Or do you mean for specific populations? Like it's a very complicated problem, and it likely needs to be taken apart in a very sophisticated way and then tested bit by bit.

You know, the universal income or universal benefit for children—that's a kind of an interesting idea. There's some evidence that that helps cut child poverty and maybe the detrimental effects of absolute privation. But there's always the possibility of unintended consequences. And so don't be thinking that, you know, if you think poverty is caused by lack of money, you think that giving poor people money will solve poverty.

But if poverty isn't reducible merely to the absence of money, then the provision of money might even make it worse. I had clients who had a variety of personality problems and addictive tendencies, and they did fine except when they got paid often, unemployment—and then they were done for, like three days off, you know, with their parasitical friends destroying themselves. Money certainly wasn't going to fix that problem, quite the contrary.

So this is maybe where your psychometric testing would come in because if you have multiple factors that you can use to make these kinds of choices and policies, you might have a better chance of success.

Yeah, well, you'd also need a plethora of outcome measures, right? Because if you define poverty only as income, then you've essentially accepted the proposition that the only valid measure of success is monetary status, and that's a foolish assumption. You know, I think a multi-dimensional approach—one of the things I used with my clients in this plan program that I put online, Future Authoring, is predicated on this.

So someone who isn't poor has an intimate relationship, has a family that functions, has friends that they interact with, has a job or a career, has a means of using their leisure time productively, is engaged to some degree in the civic community, takes care of themselves mentally and physically, and can maybe regulate their temptation, something.

So there's eight dimensions, and if you're doing well in all those dimensions, even in the absence of material plenty—which does happen from time to time—then by what means are you poor? And that's a much more—I'm not saying it's perfect, and I'm certainly not saying there shouldn't be other approaches, but it's a much more nuanced approach to what constitutes poverty than the mere absence of money.

From Garrett Maples, and the question is, "This China has managed to create an economy in similar size to the U.S. while blending a command economy with a capitalist one. Does this undermine the argument that U.S.-branded capitalism is the best version?"

Well, we'll see how the Chinese do at transitions of power. See, the thing about a unidirectional and even an authoritarian state is that it's possible now and then that it can be more efficient if it gets lucky and is going in the direction that works at the time, and that's fine until something changes, which it most certainly will.

One of the things that's so amazing about the United States—and I've watched this happen time and time again because I'm old enough to have seen it—is that no matter what problems emerge in your country, there's a bunch of people somewhere who are already working to solve it because it is a free country and it is characterized by genuine diversity and distributed autonomy.

And so you guys go in the wrong direction and you hit a wall, and what happens is a bunch of people who were working in the opposite direction pop up and say, "Hey, over here, this is working. How about we try this?" And away you go, and it works over and over.

So you might not be as efficient in the short run now and then, and you might have even said that about Japan versus the United States in the 1980s, say, when Japan was such a powerhouse and was heading in a single direction, in some sense, but the Japanese couldn't manage failure. Partly because they couldn't let enter large enterprises, you know, you hear that mantra, "Too big to fail," eh? It's like, "No, no, no, so big it will certainly fail." That's the proper mantra.

And the Japanese couldn't let their devastated and archaic systems collapse, whereas you Americans—like, you'll let things fail, or you've been pretty good at that. And what that does is open up a space for things to succeed.

And so the Chinese could gain an edge in the short term, but they also have a president for life and a social credit system, and so that doesn't really seem like progress to me, and I think it will stultify them in the final analysis. America is so creative. You look at Silicon Valley—I mean, you have such a concentration of brilliant and creative people there. It's unparalleled.

It's an unparalleled pool of stunning talent, and you don't know where the next solution to the problem is going to emerge. And so you guys are perfectly willing to let a thousand, a hundred thousand, five hundred thousand experiments flourish, and so then when something does go wrong, a multitude of solutions are already at hand.

And you can't get that in the absence of genuine political and economic freedom, so no, I don't have any faith at all in China's ability to prevail in any fundamental sense over any reasonable span of time. So, I'd bet on the U.S., and I'd bet on the West, you know, as long as we don't do our institutions in because of all the guilt that we seem compelled to foist upon ourselves in an unthinking manner.

I'd bet on free and diverse economies, just like everyone else bets on them. People put their money in the American stock market, and rich Chinese do exactly the same when they're allowed to, and no bloody wonder.

So, no, it reminds me of Winston Churchill's comment that democracy is the worst form of government out there, with the exception of every other type of government that he's ever seen, right? Right, well that—and that's kind of essential to, I would say, something like an appropriate conservative ethos.

It's like, yeah, it's flawed, but it's not as flawed as your utopian vision. You have to accept—that well, and even appreciate the flaw in some sense. You have to appreciate the flaws in some sense, and that's a hard thing to learn. You have to be a pretty sophisticated thinker before you're willing to see the inadequacies of a system as part of what actually makes it great.

And so, every time I come to the United States—I'm just—and I've traveled across the U.S. a lot. I think I've been to virtually every state and pretty much every major city, and the wealth of infrastructure here is stunning, and the creativity of the populace is amazing.

And the desire of people to maintain their freedom is remarkable, and the entrepreneurial spirit that imbues the country and that gives it this sense of drama and purpose isn't manifest to the same degree anywhere else in the world. And you know, we could turn everything into hell with enough stupidity, and maybe we will, but all things considered, I'd still bet on the U.S. and the West for all sorts of reasons.

Yeah, that's a wonderful, wonderful note to conclude on. So, thank you, Dr. Peterson. It's been a pleasure and an honor for you to be here with us at MIT. I'm going to turn it over to Anusha in a minute to conclude and to give her thanks. Before doing so, I want to add a few more thanks.

This event, as complicated as it has gotten, was really the outcome of many people and their extraordinary efforts. So, obviously, the Adam Smith Society. I want to thank Patrick Fay, Anisha Colin Tari, Sam Hoyk, and J.R. Scott for making this possible. And at OIT, I have to thank the Student Life Office and particularly the director, Nia De Young, and Nicole Willetts for basically just shepherding this whole process from beginning to end and making it possible despite all of the different hiccups.

Then their colleagues, Patsy Thompson and Laura Watkin. And on that note, Anusha, I'm going to turn it over to you. And again, thank you very much, Dr. Peterson. Really appreciate your being with us.

My pleasure; I appreciate the invitation. I'd also just for a sec like to thank my producer, Eric Foster, and my secretary, Jordan Spencer, and my daughter, Michaela Peterson, as well, because they work tirelessly behind the scenes to make sure this would work on our end, and I appreciate that very much.

Yes, thank you so much, Dr. Peterson, and Dr. Lowe, and Patrick, and Sam, and Professor Hanlon, and Adam Smith Society, Stanton Foundation, and definitely Michaela, Jordan, Justin, Eric. It has—it took this event about a year. It was just a cold email to Dr. Peterson that I found and sent, and I never expected that my email would be responded to.

So, Dr. Peterson, thank you so much. I could not be more grateful. And also to Nicole and Neil from Student Life, who pulled a lot of strength for us to make this happen on Zoom and through emails and other texts. And thank you, Dr. Peterson, for coming. It was—we are having feedback that this was an amazing conversation, and everybody's excited. But it's too bad if we were in an auditorium, I'm sure we would hear like a huge clapping.

Well, I'm back in May. I'm back in May, so maybe we could do something live then. But this will go out to lots of people too now because of the way we did it, and so you never know; this might have turned out better than it might have otherwise. In any case, so, Chris met—I don't know why it happened. I mean, I came from all the way from Dubai for this snow to happen. It was very strange.

But thank you so much! I am overwhelmed; I am very humbled. Thank you, thank you, thank you! And thank you for our audience to be here. We were so happy, and we got your messages. Thank you, good to meet all of you, and thank you very much for the invitation and the hospitality.

Yes, big thanks again to our speakers, our planners, and of course to you and our audience for taking some time this Friday evening with us to really explore some of these deep topics and, you know, giving us a place where we can have these discussions, you know, touch on controversial topics and, you know, things that are of great import today.

So, really appreciate it. Just a reminder—please join the Adam Smith Society if you haven't already; it's free. We're going to watch your emails; we're going to be sending out an email about giving away the books, Dr. Peterson's new book. And, yeah, that is it. Thank you again for joining this evening, and I look forward to seeing you down the road. Thank you so much!