It is widely known now, as it was not before 2008, that the financial markets were characterized not just by irrational exuberance but also by widespread fraud, deception (including self-deception), and market manipulation. Not to mention in the financial and corporate worlds alike a loss of ethical moorings, resulting in distasteful manifestations of greed. Even now, most members of the financial and business elite do not seem to have appreciated the extent to which they entered a separate moral universe; many seem to feel aggrieved, perceiving themselves to be unfairly scapegoated when it comes to assigning blame for the financial and economic crisis. This, too, is part of the arrogance, this belief that there were a few bad apples but nothing systemic had gone wrong in the way the financial industry and big businesses were being run.

So, in a classic tragedy, arrogance leads to folly. The follies have been many. The payment of multimillion-dollar and -pound remuneration packages by the elite to itself (all remuneration committees being filled with the same kind of people). The creation of toxic financial instruments that multiplied and focused risks. The self-delusions and inadequacies of regulatory bodies that grew too close to those people nd businesses they were supposed to be regulating. Above all the loss of perspective about the purpose of business, which is not at all the maximization of short-term profit or even shareholder value, but rather delivering goods and services, to customers (in ways they might not even know they want), in a mutually beneficial transaction. Profit and share price increases are a side effect, not a goal.

[...] This translates directly into higher labor productivity and--eventually, and if workers acquire the necessary skills, and society develops the necessary tools for managing income distribution--higher wages. Mechanization or robotization is not new and unusual, no matter how clever and impressive the robots are. They are just the latest generation of capital investment, and it benefits workers to have more capital enhancing what they can do. Eventually, productive investment drives long-run economic growth and the higher incomes that come with that; how the incomes are shared is a social and political challenge. It is, in the long run, a good thing that machines or robots take over activities they can do, freeing humans for the things only they can do. This makes work much more intrinsically rewarding for very many people.

I don't think, however, that we understand how to think about what increasing productivity means, or how its benefits will be shared, when there is no "product." Increased income inequality has accompanied the productivity increases linked to digital technologies, indicating that the gains have not been all that widely shared so far. This accounts for the confusing debate under way among economists about the implications for jobs and incomes, including income distribution, of the current wave of capital investment in digital equipment and machines.

[...] It is not possible to redistribute incomes unless the economic pie is growing. Democracy itself is more fragile when growth halts. [...]