Teaching Capitalism to the next generation with William Kline

Alexander McCobin:

Well, welcome everyone to this webinar with Liberty Ventures. For those who are new or watching this and aren't familiar with the network, Liberty Ventures is the largest network of values, aligned business leaders, investors, executives and entrepreneurs who are all committed to a free and prosperous. Future and through this network, we not only facilitate connections between like valued business leaders, we facilitate opportunities for you to actually work with one another, whether that is learning from incredible people like Doctor Bill Klein who going to introduce in a moment or investing together and supporting early stage startups or by values line founders advising companies on how they scale. Or recruiting talent who aligns with your culture. We also put on in addition to these weekly webinars in person event. Including sponsoring the principal business summit coming up next week in New York City for over 200 incredible values, aligned business leaders like John Mackey from Whole Foods, Joe Lonsdale from 8 BC, Steve Forbes from Forbes Media and more, which, if you haven't signed up for yet, we'll send you follow up information.

Would love for you to join us there if you're in New York or want to come out. And connect in. Person, but the reason we hold webinars like this is to not only provide a spotlight for incredible members of the network, but also to give you an opportunity to learn from them. Start to form connections and relationships and think about how you're able to carry on the incredible work of advancing freedom and prosperity through business. And to do that. I can't think of a better person to welcome than Doctor Bill Klein, professor at the University of Illinois, Springfield, and also the executive. Of the Academy on capitalism, which I should say I'm proud to be a board member of and spoke at a summer seminar that the Academy put on for 50 undergraduate students this summer to really explore the concepts of classical liberalism and capitalism, and how to and how to get involved. As business leaders and advocating for those.

Two things, and we invited Bill to join us today to talk about what it takes to actually teach the principles of capitalism to the next generation as something that we really care about, something that we want to do through liberty ventures and principled business, and that The Academy Is taking a leadership role in doing and bill in particular doing so. So Bill, thank you so much for taking time out of your busy schedule. I know that the school year just started for you, but just so thrilled for you to be joining us and sharing your insights with the Liberty Ventures network today.

William Kline:

And I'm thrilled to be here as well. I will also be at the principal business summit in New York and I'm looking very much forward to that. My name is Bill Klein. Just a little bit about myself, way back when I went to Grove City College, took economics from Hans Sennholz. He was a student of Van Meeses. So I've been doing. Liberty, studying since 1986, I went on to get my PhD in philosophy from Bowling Green State University because that was one of the few universities that actually would. Except somebody with liberty proclivities, shall we say they didn't give me an easy run of it, but they were willing to engage the arguments, and I had a wonderful list of professors, got my PhD, went on to teach. I have been running. Programming for the Academy on capitalism for over a decade and now for the last couple of years, executive director. And my passion and dedication has been always to bring an education to undergraduate students and figure out how to get the message about capitalism to them in a fashion that. Strikes a chord so that they remember it and makes a difference. And interestingly enough, I think students are interested in hearing that. And So what I'm going to talk about today is. There's more than one way to teach about capitalism, so I'm not going to pretend mine is the only way here that that I want to approach it with, and that The Academy Is attempting to do but. I do want. To say that. It's an important thing to consider and I want to start a discussion and possibly even a revolution in how capitalism is taught. And what I want to do the focus of that is. So many people are familiar.

If we're talking about capitalism, that if you learn about economics, you're learning about capitalism and free markets and liberty. If you're learning about political science, you're learning. You can learn about liberty, right? You can learn about John Locke. If you're learning philosophy once again, it's a very tight fit. But if I say that. You know, learning about business is learning about liberty. L

earning about business is learning about capitalism and learning about capitalism is learning about business. People kind of look at me sort of odd, right, because the way business is taught now and which is very useful, is people are taught their skill sets that then they can go out into the market and employ, add value and make their lives better by earning a nice income and add value to the company through, say, accounting. Marketing, finance or management or any other number of disciplines. So we have the skill sets that are practical and then we have this other stuff that's kind of up here about liberty and I want to close that gap because it's a dangerous gap because people assume that just because you're learning about business, that all of a sudden you understand what markets are or that you understand the importance of markets. And what capitalism is, and that's not true at all. If you don't take time out or nobody takes time out to. Well, teach, you're not going to learn. So that's kind of the approach here that that we've been pursuing at the Academy and that I pursue my classes here and with other people like Alexander. So what I want to say is in teaching capitalism. Uh. We combine the big picture with the micro picture and there I think there are two elements of this for for teaching capitalism to to undergraduate students specifically. One is to regain general education right now if if somebody is a business student. They don't start their major until their junior year and that means their first two years they're taking English history philosophy. All from the humanities, and it is the case that they have a definite, overwhelming perspective about the value of capitalism and business, and it's not good, and that's what students here, and that's what students get. And I think that's I think that abdication is a mistake and not just for reaching business students, by the way, too political science, econ, philosophy majors, none of them hear good things about business or capitalism, more interesting things. So in history class you learn the history of politics. You learn the history of generals and wars. But Sam Walton revolutionized. The retail industry.

Can any student tell me how when what difference that made? Probably not Jeff Bezos with Amazon the same or people who are even less known but shouldn't be Malcolm McLean? I love Malcolm McLean. I am so interested in Malcolm McLean and people will. Often will be like who in the world. Maybe not the quite the inventor of the shipping box, but definitely the person who integrated the shipping box with trucking, with railroads and with shipping. The modern industrial container and the container ship is responsible for more global trade than any politician. Before or since. I I think it's responsible for like a something like a 700% increase in global trade when people complain about globalism or advocate globalism and focus only on politics, they are missing the picture that business doing business has driven globalization. We don't learn about that in history class. Our our history students, our our students don't learn about the history of business and the pride that they can take and all the good things that happen. I know bad things have happened in the world. We're not trying to gloss over that, but that's what everybody focus. Is on and there are amazing things students could learn in, in, in history. Another example, and this comes from history of accounting. Right, I I like using accounting because people think that that's the farthest run away from the humanities, right? How can you possibly debits and credits? Well, there's two things. One I I was reading this this. Accounting history professor medisch. Medici is his name and he said there's two functions of accounting. One is cash flows. We all know that debits and credits to see whether you're making a profit. The second is is to keep track of who owns what, whose property is it as it goes through the firm. And I thought, man, that's an amazing lesson in property rights. That's what accounts are doing. They're keeping track of property rights. And this has amazing implications for things like corporate social responsibility, as it's currently understood.

A notion from people that there's sort of a big pile of money that business called profit, the business can just give away and not realizing that in fact that money is never ownerless, it's owned the whole way through. And you're going to figure out who you want to take it from literally. And possibly steal it from, but nonetheless that that property is owned. There's not a free pile of cash. I think that's a very it doesn't enter the debate on corporate social. Responsibility. Because people don't take a. I don't know. People don't think accounting has anything to say about that, but it does. Another thing history of if you will in a sense accounting. This archaeologist, Schumann Basarat, basically discovered what these little things that they were little pieces that they found in the Middle East, and nobody could figure out what they were. And she figured out that it was a very early form of debits and credits that people would put these little pieces in a clay. Envelope and that was your record of what you loaned somebody, whether it was cattle or corn or something like that. And that they made the transition from these pockets to A2 dimensional, right. At first they were just imprints, but then they have discovered that writing started to accompany these records of who owned what. And it was like people's names phonetically spelled. And she makes the argument that. Accounting is actually the source of writing. People learn to write and writing developed because of people wanting to keep track of accounts. And that's that's that's earth shattering because the humanities, right, they focus around things like history, English, philosophy, writing. Writing is is is taken to be something that's deeply human writing is something that's taken to be something you don't mess with money. You can just take and redistribute however you want. Business is just out there doing your skills, but writing. That's what it is to be. Human. And if Schmandt Besserat is right, then actually trading. Keeping track of those trades. Is fundamentally human as fundamentally human as writing, if not even more because it existed before writing existed. Yet we never view business or accounting as a possible humanity or as a possible indicator of what it is to be human.

Now I don't mean necessarily all the depreciation tables and stuff like that, but I mean the activity. Of it, and they don't learn this in the humanities. So we really have to. And there's other books and examples that I could give. We really have to bring back in the business has a rich existence in the world, a cultural existence, a historical existence of philosophical existence and tie the humanities to business. It's there, it's just nobody's teaching it. The second part I want to say is that even once they reach their business major and and and this I want to appeal to people too, have already graduated.

There are important, as I said, with accounting already, there are important lessons. I think people can learn about capitalism just from learning their skill sets. I think this is important for students going out once again to realize the value of the system that they're working within. And that they're not just a cog here, that they're part of something that's really kind of wonderful and makes the division of Labor and productivity and freedom possible. Right. But I've also talked to people who who've run companies and CEO's and business people. And as soon as I start talking about capitalism or freedom. They'll say, well, I don't know anything about that. I just run my business and I just I want. And like, no, you don't understand. You know, more probably than I could ever know, because in the running of the business, in the doing of business we're in, you know, the case of the University of teaching just the business skills students can learn exceptionally valuable lessons about capitalism. And we need to start teaching it that way too. So I've already talked about accounting and keeping track of property, which I think is very important. What about marketing? I was just just talking to the marketing professor and he says. You know, when I teach marketing, one of the first things I tell them is is. Why you're doing this? What you're trying to do is get people's voluntary consent. To buy. Whatever you're selling. Voluntary consent is the heart of capitalism. Voluntary consent is what it all centers around. That's what the rules and the laws and. And the practices and the institutions is all set up. To protect voluntary choice and respect, voluntary and hold people accountable for voluntary choice as well and. But we don't go that next step. It's like we're embarrassed to. It's there. Marketing is not about manipulation, actually, because marketing is marginally effective, it it does work, but not in the way that people's imaginations are all worried about some sort of psychological manipulation that forces. And that's just if you look at the data, all garbage, that's really important lessons that you're in the market to get others voluntary choice and you have to act accordingly, which means you have to. Offer value for value. We need to go that extra step. That's a wonderful lesson, finance. There's another one finance. OK? Especially high finance. You're dealing with derivatives or whatever or, you know, stock market. And what can that have to do with anything? Hernando de Soto has a wonderful book called The Mystery of Capital. I think it's worth. Reading. Because it's not entirely clear that we understand what capital is. But the one thing we do understand is it only exists in a market and you need capital to make the market run. Capitals lifeblood. You need investment. You need finance so, our finance students, learning that at all, that there isn't finance within say, Communist or real socialist countries, not just ones with the social safety Nets. There's buildings. Right. But a building out in rural Illinois, even if the state of Illinois makes a grant to improve that building, it's not capital. It's economically dead. There's nobody there. Same with inner cities.

It's very sad to see portions of cities crumbling, old hotels and buildings and people say how valuable. And it's like, no. At the moment it's just bricks, it's not capital, it's not functioning. You can't borrow against. It. And not only that, so you know what makes something capital what, what kind of economic vibrancy, what kind of rules does it take in order to have a system? Where you have capital, I was talking to somebody from Eastern Europe and they were talking about how well a firefighter can live here on their income. But people in Eastern Europe like a firefighter, they can't afford a home. And I looked at him and I said that's because in Eastern Europe, you have to put about 80 to 90% of the money down, up front. You don't have a sophisticated mortgage. System like we do here. And this person left me and said. That's true. Right. So because we have mortgages and worked out how to do that finance. People on a firefighter's salary can have a home their own home. And once again, we teach the skills of finance, but we don't teach all the other wonderful stuff that. Comes out of. It and why it is the heart of capitalism and why it's worth taking note and once again, insane policy follows from people not realizing the importance of return on capital. Oh, look, you've earned a revenue. Oh, look, you have you have extra money leftover. You know, we can do better with that as the public, we can take that and we can disperse it. Right. Because that's just the extra pile of money and never consider that no return on capital is important.

William Kline:

And if you don't get a return on capital, there's no reason to do the business. If I'm not going to earn anything more than I'm going to earn some sort of AAA bond. Life's a lot easier just investing in the AAA bonds and going out fishing for what it takes and I'm. Probably preaching to the choir on this, but for what it takes to be a CEO and entrepreneur at the very least you need to earn your return on capital. And once again, nobody talks about that. The other thing too, that nobody talks about. I just had a student today. I was talking about how you know. What? What's?

What's something in the world that's painful, that you have to do and they're, like, work hard to be successful. And I was like, damn, but that's not what. We we don't teach about work ethic. It's funny in in a Business School where you know we'll teach all the skills but not add. The other thing that now you got to work hard too. In terms of your life goals and in terms of your purposes and in terms of what income and remuneration you wish to generate. But that's part of the equation too, but I'm going to pull back from that because I want to talk about management as the last thing, right? So I already said we have to recapture the general education program, show people the richness of business and that it's something to be valued as part of being. Human and that the second part while they're learning the skills of business, they're actually learning about capitalism. Management, I find, is intriguing because. And and this goes before Peter Drucker.

This goes back to to the late 1800s, but there's always been a sort of this crisis of identity when it comes to managers, right? As the manager, just the corporate man or the corporate woman, a suit that's dead inside somebody who just takes orders and gives orders, you know? What is it that management's supposed to do and this is what management gurus of course make their fortunes off. Of. And I find. Find. They find bits and pieces of it here. There are bits and pieces of it in Drucker and others, but what if? You as a manager, your responsibility and this is a heavy responsibility, is to coordinate people's voluntary choices. People voluntarily chose to work. Wherever this is right and the company voluntarily chose to hire them, that is a contingent relationship that could end at anytime when either parties dissatisfied. That takes a lot of work to nurture.

That takes a lot of work to make people satisfied and happy, both in the business and as an employee. And managers, I don't believe are taught that their profession is to human resources. Does it a little bit, but it's like a lot of conflict resolution, but that they're really there to cultivate these voluntary choices and make it be worth people's while, right by. And that's how you can add value. I don't know if it's exactly the middle person, but you know, teaching respect for the middle person who connects things up so that you can do your job so that you can get value from what you do when and so that the company can get value as well. That's not an easy task. You know, the cats don't organize themselves. That, that's that's kind of really people don't organize themselves, and people often don't know how to or plug in. And so the manager serves is really crucial function as almost like the glue a a light glue, if you will, of of voluntary choices. Right? And keeping people working together. Keeping communication going, everything that it takes and that's an amazing responsibility. And I think it's something that could be learned in management courses. It's not quite Todd. It's almost there.

Like I said, with conflict resolution, but nobody's taught once again that the heart, the beating heart of the system, is voluntary choice. And you are responsible for getting other people's voluntary choice and the way we do that in the market is offering and adding value. And so that puts me I try to be aware of time and your time. That puts me at about the 20 minute mark here in my presentation. I think after my presentation we're having a Q&A. Is this correct, Alexander?

Alexander McCobin:

That's right.

William Kline:

I'd like to open it up for questions and answers, please, or debate I'll take anything.

Alexander McCobin:

Fantastic. So Bill, thank you. I think there was a lot of really important insights in there and we'll take questions as they come in. But the first one that I want to bring up for you is for anyone who isn't a professor. Who only interacts with young people, perhaps as parents, or sporadically as a mentor or giving talks. What do you think? Are some of the most important lessons for them, for how to think about communicating capitalism and their involvement in teaching this to the next generation?

William Kline:

I think there's a narrative out there. I don't know if it's always dominant, but there's a narrative that what you want to be is the king of the hill. So you can tell other people what to do. We'll see it in movies. We hear it in music, and I know it's in people's conception of business. You want to be the boss so you can tell other people what to do. And we have to smash that. What? You're out there. Doing is voluntary choice and you have to figure out why people want to associate with you, either as a friend or as a business person. What value are you gonna offer? And. I think that that's. I think that's bedrock. That puts you in the world as a productive individual and not as somebody who's a manipulator or somebody who just wants to take from others. That puts you in a framework and a stance that, yeah, this is how I have to navigate the world. And business is the way we do that with money.

Alexander McCobin:

I love that and we do have a question here that that ties in with that, but I'd love for you to articulate a bit more, which is what are some of the biggest objections or misunderstandings that you hear from students about capitalism right now.

William Kline:

Hearing from. I hear from my fellow faculty the the biggest problem with students, right? So. Students don't ask questions and people get all upset and and and and and and. But The thing is is you got to know something to ask a question, right? If you just walk into something of, no. If I walk into a surgery, I don't know. I have no idea what question. So it's not a misconception. The biggest problem with students is they're not taught any of this. Big picture stuff. If they have a misconception, it's come from the humanities. That business is exploitative, or that at best it's amoral. There is a little bit of a thought. Not so much in business colleges, but in undergraduates that you know you want to be the boss, because then you can take it easy. That's a huge misconception. Like I said, that marketing is somehow this magic manipulate. Later is another misconception. Those are the ones that I run across in in the College of business in the humanities and stuff like that. It would be sort of Marxist or Neo Marxist interpretations that I would run into. Does that answer the question?

Alexander McCobin:

I think that's actually really important to note that young people don't have misconceptions of capitalism as much as they don't understand. They haven't learned anything about it to begin with, and that is a significant challenge for us to. Workout.

William Kline:

Yes.

Alexander McCobin:

Now I'm gonna actually follow up on that and ask. So when you teach capitalism, the principles of capitalism to young people, what's the reception like typically from them?

William Kline:

I I get. It it takes a minute, right? Because you always walk out of the room and then you come back and I get some very good reception from from the people who are actively engaged and and wanting to learn that they've never thought of that before, that this is something that maybe. Uh, changes the way they look at pursuing their profession and something that would be useful actually, and help them out. That's not immediate. But yeah, this this sort of. Not just a change in attitude, but a change in the way that they now interact with the world. And see what they can do. That's the fun part. When when people like get, like when it when like ohh geez, I don't just have to like this little narrow. Oh, I'm going to go work for the corporation, which is OK, but I have this full range and when when they realize that and I do get students to realize that that's. That's gold. But that only comes from doing big picture stuff if you just. I I have a sad story about that. But I'll hold off.

Alexander McCobin:

Well, I'm not going to push you on that, especially since we're coming near the end and I want to, I want to finish on a on a happy note. And so I actually want to give you a moment to before we wrap up to actually say a little bit more to everyone about what the Academy on capitalism is doing, what you've got planned coming up and for anyone who's listening, how they might be able to get involved with that.

William Kline:

OK, great. Well, the first thing is on October 2nd at the University of Illinois in the Pollinger Auditorium, we have Mitch Daniels coming. We're gonna have a fireside chat with him from 7:00 to 8:00 October 2nd in Foellinger about the importance of budgets and student education. He was president of Purdue, the Academy on capitalism is dedicated to bringing. Educational opportunities of students that they otherwise would not have. The university is not investing. In these type of. Things, but there are people who are interested. There are faculty who do like doing this kind of thing, and they need some resources so the faculty can that the Academy provides grants to those to bring speakers in or to sponsor classes. But the other thing the Academy has also realized too, not just within the university, but. Within the broader environment is that young people need to be taught this, and they need to be taught this in in, in an intensive fashion where it's fun to learn. So we're starting to do summer seminar. Ours because the next generation of business people need to realize the value of the system so that they can defend it and be supporters of it. And we need the next generation of people who are going to run the Academy or any other organization as well. And if you look at that. Those people today, they all went through and it's a very effective learning mechanism these summer seminars. So we offered one this summer our pilot. It was a great success. We're going to offer at least a couple next semester and once again. Trying to show students that it's valuable to learn about this as well as the right thing to learn about. So yeah, addressing the talent pipeline and if universities aren't going to provide it, we will and we'll do it better.

Alexander McCobin:

You're here, bill. Thank you for all the incredible work that you're doing. Teaching the next generation about these important principles for being, for being so involved with us. And I'm looking forward to seeing you next week in New York, hopefully seeing everyone who's watching live or listening to the recording afterwards as well.

William Kline:

Yeah, my e-mail address is in the chat, so feel free to copy paste and e-mail me if you do have any questions. Look forward to seeing you next week in this marvelous principal business summit. I'm so excited and thank you all for listening today. It's been my pleasure. Thank you.

Alexander McCobin:

Thank you, bill. Thanks everyone. Look forward to seeing you next week.