George Yeo Keynote | The New Enlightenment Conference 2026

It is wonderful to see all of you here, um, in Edinburgh. Sadly, we had too many people to hold our event in Panmir House. Um, although many of you have been to Penmir House. If you haven't been to Panmir House, just let us know and come and visit us at some point. Um, the great home of Adam Smith.

So, we're here today and tomorrow to celebrate the 250th anniversary of one of the greatest books ever written, uh, by one of the greatest thinkers of all time, Adam Smith, and that book is The Wealth of Nations. How, though, do you celebrate the 250th anniversary of such a great book? We could have organized an academic conference, uh, an exercise in intellectual history. We could have examined different aspects of this great text and the various things therein. We could have considered its reception in different countries across different times. Or we could have assessed its place in the canon of political economy and other great books. Or we could have examined the life and times of Adam Smith and his contemporaries. And all of these would have been worthy efforts and, and certainly compelling. But we chose to do something different. We chose to treat the anniversary not as an occasion for reflection, but as a provocation because the questions Smith was asking, well before 1776, through to his last days at Penmir House, are still alive today. And in some ways, they're more urgent now than they've been in decades. And to understand why, it helps to understand where we are.

So, obviously, you know that you're here in Edinburgh. If you don't know that you're here in Edinburgh, then there's some other issue. But more than two and a half centuries ago, in the 18th century, this city, Scotland, and we can include Glasgow too for the Glaswegians in the room, was one of the greatest intellectual centers of the world, if not, for a time, the epicenter of intellectual development. Not because Scotland was the wealthiest nation or the most powerful, but because a distinctive tradition of inquiry flourished here, animated by a shared conviction that careful observation and honest reasoning could illuminate how human beings and societies work, and that such understanding could improve the human condition. David Hume, Adam Smith, of course, Lord Kames, Dugald Stewart, and many others engaged with this spirit. They were living through, indeed, one of history's greatest transitions. The bonds of feudalism in Europe were breaking down, commercial society was emerging, trade expanding, towns growing, people moving, exchanging, making choices that had previously been made for them by birth or obligation. For the first time, ordinary men and women were becoming active participants rather than constrained subjects of a system they had no hand in shaping. The Scottish philosophers aimed to understand what commercial society actually produced, not what it should produce in theory, but what it did to individuals, to social and political life, to moral character, to the distribution of power. And they examined these questions together. Economics and ethics, commerce and character, politics and human nature. These were not yet separate inquiries. They were simply aspects of one large question about how societies work. Adam Ferguson, for example, a contemporary of Smith and someone else with a great first name, worried about what growing prosperity might do to civic life, whether commercial success could erode the social bonds and civic virtues that made it possible in the first place. That tension was not a criticism of commercial society. It was a serious attempt to grasp, grasp what was required to sustain prosperity. And what followed was remarkable, and it wasn't accidental. The societies that embraced these principles generated wealth, innovation, and human development at a scale previous eras couldn't have imagined. But this wasn't merely individual advancement. It was social transformation, the gradual expansion of opportunity, the strengthening of the rule of law and education, the building of the civic foundations and shared norms on which prosperity depends. When it works, it works because individuals are embedded in societies with structures, culture, and civic energy to sustain it.

We are here today because the central concerns of these 18th-century thinkers are our central concerns today. We're living through transition again, but at a pace and scale that would have astounded even Smith and his contemporaries, themselves living through profoundly revolutionary times. Today, the post-Cold War consensus on open markets is fracturing. Nations are increasingly subordinating commerce to state interests, protecting their own industries, weaponizing supply chains, treating trade as an extension of geopolitical rivalry. The justification is usually national security, but the logic is older than that. It looks and feels a lot like mercantilism. The same doctrine the Scottish philosophers examined and found wanting, above all, in the wealth of nations. The question it raises is not new. How do nations maintain genuine strength and national security while preserving the open exchange that makes prosperity possible in the first place? And here the problem deepens because alongside this retreat from open markets, we're seeing economic stagnation in many parts of the world, no more perhaps more visibly than here in the UK, where productivity has all but flatlined. And it feels as though we are rapidly moving from an already concerning zero-sum economy to a negative-sum economy. The energy and creativity that markets can unleash, new firms, new ideas, new ways of doing things, have been suppressed rather than released. And the political response across the spectrum and across many countries has been to reach for more state direction, more intervention, more control. The assumption seems to be that markets have failed and governments must step in. But that diagnosis may be mistaken. It may be that the conditions for innovation and broad-based growth have been allowed to erode: competition, sound institutions, the dispersal of power and opportunity. And even where innovation appears alive and robust, as in the United States, political leaders from left to right seem increasingly willing and wanting to put the state in the driver's seat. Now, this doesn't mean states have no role in economic growth and development. Even in Smith, in The Wealth of Nations, knowing all of you have read it, he recognizes this. But state direction too often comes coupled with with hubris, a belief that that the complexity of markets can be made to bend to political will. And history often suggests otherwise.

Now, taken together, geoeconomic fragmentation and the rise of state capitalism, if you want to call it that, are not isolated pressures. They represent a broader drift away from the disposition that produced the prosperity we inherited. That disposition rested on a few hard-won insights: that economies generate more wealth, creativity, and opportunity when power is dispersed rather than concentrated; that markets, for all their imperfections, do things that states cannot: coordinate knowledge, reward innovation, and reveal what people actually value; and that the instinct to control outcomes, however well-intentioned, tends to produce less of what it promises. What is replacing this is not a coherent alternative. It is something older and more instinctive: a mistrust of markets, a belief that outcomes are too consequential to be left to decentralized decisions, and a confidence that the state must be in control.

Then there is the question of corporate purpose, or capitalism in general. And here something different may be happening. For more than a decade, ESG environmental, social, and governance frameworks dominated boardrooms and business schools the world over. It offered firms a way to demonstrate they were doing more than just making money. But it became, in some instances, more troubling: a vehicle for advancing social and political agendas beyond any firm's legitimate purview and beyond the consent of those they serve. And now it is in retreat. What remains is an opportunity to ask the harder questions honestly. The job of a firm or financial markets is to create genuine value and operate within the rules societies set. It is those rules that carry the moral weight, not corporate mission statements. But within that framework, how firms behave matters enormously. Boards and managers are moral agents. How they lead, how they treat people, what kind of organizations they build. No compliance framework substitutes for that.

And cutting across all of this is artificial intelligence. A technology unlike those that came before it. Not just another tool that augments human capability at the margin. Something more fundamental. A force restructuring work, knowledge, and power in real time, raising questions about human agency that no previous technology has posed quite so directly. How do we ensure that what emerges serves human purpose rather than merely displacing it? How do we preserve what matters about judgment, connection, and creativity when the pace of change outruns our capacity to make sense of it?

Which brings me again to Adam Smith. Not as a historical figure to be revered, but as a thinker whose core insights remain live and urgent. Smith wasn't a naive cheerleader for markets. He understood deeply how they could fail through monopoly, through corruption, through rules that favored the few. And his response wasn't to abandon markets. It was to insist they operate within a framework of law, education, and genuine competition, and that commerce be understood in terms of what it is actually for. Markets are not an end in themselves. They are conditions under which human creativity and exchange can produce things no central planner could design or foresee. And they only work when embedded in the social fabric of communities that share some sense of what we are trying to achieve together. We're not here to study how Smith thought. We're here to do what Smith did: observe our world carefully, ask hard questions, and think seriously about what could improve it. That's why we've organized this conference around these four themes: geoeconomic competition, moral capitalism, economic dynamism, and artificial intelligence. We brought together thinkers, including you in the audience, from different backgrounds with different perspectives to push hard on these issues because that's the legacy worth recovering. That's what we mean by the new enlightenment.

And here is why Panmore House matters. Now, every time I'm in the house, hosting a dinner, engaging with remarkable thinkers, sitting in the rooms where Smith spent his final years, I feel something that is difficult to articulate without sounding fanciful. And it is not that I believe in spirits or ghosts, but to be sure, I do feel the spirit of Adam Smith. There is a weight to the place and the conversations that were had there more than two centuries ago. Today, the house is a tangible connection to one of history's greatest minds and to a tradition of inquiry that shaped much of the world we inherited. But the point of preserving it is not to venerate that past. It is to be worthy of it, to use it as a platform for the kind of serious, honest thinking about how societies thrive that our moment demands now more than ever. The Scottish Enlightenment philosophers did not think locally. Smith's ideas, as we know, traveled and continue to travel globally, shaping constitutions, economies, and political thought far beyond these shores. The influence on the American founding, as we'll hear this evening, is one such example. And Panmore House must operate in that same spirit. The home and the heritage is here, but our ambition is explicitly global. Building partnerships with like-minded institutions around the world and extending Panmore House to new places, as far as Australia and beyond. Not a single institution broadcasting outward, but a network of serious thinkers in different contexts and cultures asking the same fundamental questions. We're not asking how we preserve Smith's legacy through reverence. We're asking how we build something worthy of it.

When Heriot-Watt University and Edinburgh Business School rescued Penmore House, they took on a profound responsibility as intellectual custodians of that legacy. That custodianship now extends to all of us, including in this room, and to a global community who understands what is at stake. The response to our moment cannot be incremental or defensive. It cannot be nostalgia. What's required is the courage to make affirmative cases, not defensive ones, for why competitive markets, dispersed power, and institutions that check concentrated authority matter. The willingness to engage the hardest questions about what capitalism is for, how it enables human creativity and development, and how it adapts to genuine change. Because ultimately, this is about one thing: flourishing individuals in flourishing societies. That is the measure by which ideas, institutions, and markets should be judged. And it is the animating question of everything we do at Panmore House. Not a production line for policy papers, but a global platform, an emerging global platform for the kind of thinking that matters. Our moment requires it. The stakes demand it. And the intellectual energy I believe over the next two days will suggest it's possible. Thank you. [applause] [applause]

Before I introduce our next speaker, I just wanted to, to say, uh, a word of thanks, um, firstly to the the Panmore House team that has worked diligently to to to put this conference together with me. Uh, I could not have done this alone, as well as the support of of Heriot-Watt University and Edinburgh Business School, which which owns Panmore House. Um, I'd like to also extend, uh, a big thank you to those that have made it possible financially, in particular the the Denny Center for Democratic Capitalism and Bruce Shaw, from from the executive director, is here, and they've had a great partnership with us over the last couple of years. I'd also like to thank, uh, the Weir family, in particular J.B. Weir, who's J.B. who, uh, is a good friend and a good supporter of Panmore House, who, who has also made this possible, as well as to, uh, Baillie Gifford and the partners who have, uh, supported this conference, but also much of our programming. Um, it means a lot because we can't do this without the support of those that believe in the mission and believe in the possibilities of, of not simply rescuing Penmore House because it's a nice building down the road, um, but because it actually means something, not simply to people here in the UK, but it means something to people the world over. So thank you very much, and, and, and, uh, it means a lot to me personally, and I know to the institution.

Now, George Yeo, our next speaker, uh, as, as all of you know, served as Singapore's Foreign Minister for a decade, um, including holding other other positions in government, as well as being a brigadier general. So, I'm sure he can shoot a gun, uh, quite well. Now, Singapore, as many of you know, is, is still a relatively young nation. I mean, this year is 1776. The United States is celebrating its 250th. Um, but Singapore is only decades old, and it became independent during the Cold War. In a region where great powers have always competed for influence and advantage, the country has built extraordinary prosperity, indeed, through open markets and competitive exchange. And today, as it has in the past, sits at, at precisely an important geopolitical and geoeconomic nexus, in particular, in between the United States and China, at a moment of a fundamental transition. Now, George has spent his career thinking about what that transition means for nations, for markets, for how power is exercised and organized in the world. And that's why he's ideally placed to be our first keynote speaker on geoeconomic competition and the new wealth of nations. George, please. [applause] [applause]

>> Thank you, Adam. >> Thank you so much. When Adam invited me to give the lecture today, I accepted almost immediately, partly because of a sense of occasion, the 250th anniversary of the publication of The Wealth of Nations, but also because I wanted to visit Scotland. In 1990, Lee Kuan Yew, before he stepped down as prime minister, paid a farewell visit to the UK. Margaret Thatcher, who liked him, laid on a thick red carpet in London. He was given the freedom of the city, and he spent one night here in Edinburgh, hosted by Malcolm Rifkind. At the official dinner up in the castle, Lee Kuan Yew gave a delightful speech about the contribution the Scotsman did in establishing an empire on which the sun did not set. That stuck in my mind. Now, in Singapore, to those of you who have been there, there's that famous statue of Raffles near the mouth of the Singapore River. But in fact, it was Raffles's deputy, William Farquhar, who probably did more to lay the foundation of modern Singapore. And within 100 meters of that statue, you have Anderson Bridge, the Dalhousie Obelisk, Fullerton Building, upriver Robertson Quay, and not far inland, Scotch Road, at which famous intersection of Orchard Road, there is Singapore's most valuable commercial property. In Hong Kong, where I worked nine years, the imprint of Scotland is even more profound. Not just in the Jockey Club, but also in Hong Kong, in HSBC, in the Jardine Matheson Group, in Jardines, in sometimes subconsciously, in the value system which makes Hong Kong such a thriving metropolis. So coming back here and seeing all these statues to great men, one wonders, how is it that during the extraordinary period of the Scottish Enlightenment, such a ferment which influenced the course of development of the entire world took place? What was it? Maybe it was pathos. I mean, the fact that the Scots had a very difficult history. Maybe it was a distance from London. Well, it's for historians to argue about the causes, but what was clear was that it was a time of transition. And today, we're entering a new transition. Many of us here worry about the way the world is going, not just through politics, but also the way AI is upending many comfortable assumptions residing in subconscious recesses of our minds for a very long time. You know, it is a good thing that in Ukraine, and in the Gulf, force has found its limits. With AI, the Israelis conducted successful but very scary decapitation exercises in Gaza and Lebanon and in Iran last June. And the Americans, with information about everybody available, they conducted an amazing campaign to change the regime in Venezuela. I'm not sure how long it will last, but as an operation, it was stunning. And the Americans and Israelis thought this could be repeated in Iran. They knew where everybody was. At a precise moment, a simultaneous attack flipped the regime, first by making sure that the Ayatollah would be decapitated. But Iran learned from last June and decentralized its command and control structure. So there was no single brain to neutralize. And the Ayatollah himself, by choosing martyrdom instead of cowering in the bunker, he governed his people in the tradition of Shiite saints, beginning with Ali and Hussein. So now the Americans, despite Israeli protest, are trying to find a way out of this troublesome spot. And in Ukraine, when Putin moved [snorts] in February 24, 2022, a few days afterwards, I listened to him give his speech in the Kremlin. What was his reason or excuse? He said, "If we don't move now and pay the price, one day it'll be another Barbarossa." June 22nd, 1941, when Hitler unleashed maybe one of the biggest land offensives in human history. Whether we agree with him or not, that was for him the reason, his response to relentless eastward expansion of NATO. He thought it'd be an easy campaign. He was proved wrong. And there will be an inevitable partition of Ukraine because it's always been a buffer region. But in the meantime, millions of young men have either perished or suffered grave injury. But it is good for human beings to know, to be aware of hubris, that just because a new technology arrives which gives you the the power, the seeming power of God, it doesn't mean that you can achieve what you set out to do, because there's more to human life, to civilization, than just the application of force. In the Gulf, American bases were badly damaged. Will they be rebuilt? If you are in Saudi Arabia, if you are in Qatar, in the UAE, Bahrain, Kuwait, do you want those bases rebuilt? If you are in the Pentagon, do you want those bases rebuilt, because they become vulnerable targets? And to make them less vulnerable, you've got to harden, either by going very deep down or by having all kinds of bristling anti-missile systems, none of which is guaranteed to work. I think there'll be some rebuilding to save face, but these bases will not be rebuilt the way they were. In Singapore, we allow our bases to be used by the Americans. I live not far from one of them. And my wife and I wonder if the Americans go to war with China and China decides to hit us the way Iran has hit bases in the Middle East, how far are we from the targets? The result is a fundamental recalculation in people's minds about geopolitics in the world. Last year, the US issued the new strategic security national strategic security framework. In effect, calling for a retreat of the US back to its own hemisphere. It's an important shift of direction. It's a shift of direction made necessary because of finances. The US debt now approaches $40 trillion, and servicing that debt has already overtaken the entire defense budget, and that debt continues to grow. Something will happen, and the Americans know it. So in Europe, Trump insists that NATO countries spend 5% of their GDP on defense. In Asia, Secretary of War [sic] at the Shangri-La Dialogue recently, he said American allies in Asia must spend 3.5% of GDP. Why? Because the American empire has reached a point where further expansion is not worth the cost, and maybe even maintaining the current position is not worth the price. But once your allies begin to have their own military capabilities, they will think differently, and they will not follow you in everything that you want to do. Then a new dispensation changes. I don't think the direction will change, even if their policy changes by a new America, by new American administrations, because the finances cannot support it. Now, we don't know how much more America will have to decline, whether it can heal itself. It's often said, "Don't bet against America." Maybe. But not even Americans are sure. And maybe a retreat will save America. I mean, when Western Rome fell, Eastern Rome, Byzantium, consolidated and lasted another thousand years. And America, which has Canada, Greenland, the Gulf of America, the northern part of South America, with three oceans and abundant energy resources, that can be self-sustaining and powerful for a very, very long time. But we're entering a multipolar configuration. For some Americans, it will not be multipolar. That if America declines, China will take over. And indeed, China's economy has already overtaken the American economy in PPP terms by a significant margin. But this misunderstands the nature of China. You know, when the Americans blithely talk about G2, the Chinese protest. They don't want it. Not because they're modest, but because it means trouble. If your aspiration is to be a global hegemon, your problems are endless. And in their own history, because they are big enough and homogeneous enough, it's better to build walls and to keep trouble out. Every dynasty rebuilds walls in China. And in the People's Republic, there are new walls for Hollywood movies, for publications, for the internet, even for viruses. Why? Because China, to protect its own homogeneity, needs to keep out and control foreign influence. If you expand like the British people once did and you incorporate vast realms, in the end, the external proletariat becomes your internal proletariat, and your society will change for the good and for the ill. They don't want that. Beijing, Shanghai, Guangzhou, they are not like London, New York, or Paris. They're homogeneous. And this homogeneity is both a strength and a weakness of China. So when the Chinese say that they have no wish to be a global hegemon, it is not a tactical statement. It is because they think it's foolish. It's unwise. Their own historical experiences teach them that it's better to kind of confine your development within the wall. And that is why they've always talked about the internal circulation, which is protected, and the external circulation, which is subject to all kinds of turbulence because of global politics. The question is, how enduring is this position? This position is enduring because of the nature of Chinese society and the fact that for a population twice that of Europe, they have one literature, one set of heroes, and a history which is marked by long amplitudes, long ascent, long declines. If you're born at the wrong time, it's just your bad luck. But if you're born at the right time, well, that's good fortune. How did this come about? The homogeneity of the Chinese people. One, of course, is the fact that the written language is separated from its pronunciation, that gives it a fixed value, a digital quality. Today, primary school children in China can recite verses from Confucius' Analects in the original. They can read the characters. Their pronunciation is different from what it was 2,000 years ago. But it's the same content, and it's across a vast realm. And the other accident in Chinese history is paper. Paper was invented in China more than 2,000 years ago. And it was a closely guarded secret. The technology to make paper until the 8th century, when in the famous battle in Central Asia, the Chinese army lost during the Tang Dynasty, China's greatest dynasty, and the knowledge to make paper leaked to the Islamic world. And paper transformed the Islamic world. Paper, 8th century. By the year 1000, it reached Cairo. By the year 1020, it reached Muslim Spain. The Islamic script, the Renaissance in Islam, was all made possible by paper. Why is paper important? Paper is important for the storage and processing of information. You watch a Chinese artist with brush, ink, and paper. How many paintings can he draw in an hour? If you have to use a paintbrush and canvas, you could be at it for weeks. When you record on paper, an ink black which consists of nanoparticles, the speed is orders of magnitude greater than writing with a hot nib and parchment. So the recording of Chinese history is voluminous. Alan Turing, I think, whose ancestry was Scottish, he had this insight that if you have an unlimited quantity of paper, you can do an unlimited quantity of algorithmic computation. Therefore, to codify knowledge. Therefore, to organize. Therefore, to organize more people across time and space: irrigation works, storage of grain, political control, communication, the recording of climatic change, of water levels. When COVID happened, the Chinese told their own people, "Do not worry. We have a complete record of every epidemic in China going back 2,500 years. Every epidemic." This data intensity of Chinese society makes it particularly conservative. China is predictable because the legacy is too voluminous. So when the Chinese say that they prefer a multipolar world, even though they may be the biggest of the poles, they mean it in their own self-interest. But it'll be a better world if the US remains primus inter pares in that multipolar configuration, if the US retreats in a chaotic manner. Can you imagine the destabilization in different parts of the world? Look at the retreat of Rome. I mean, Hadrian retreated from Euphrates in an orderly way, so that was okay. But the fall of Western Rome, what they did to Britain, to Germany, to France, to Africa: wars, revolutions. If the US must retreat, if the sun must set, let it be a long sunset, and let it quickly rise again, because it'll be a safer, a more comfortable world for all of us.

But I want to connect this idea of codification to energy. What makes Earth different from, say, another planet like Mars? Why do we have soil? Why do we have cladding of forest and grass? It's because of coding of life. All life is based upon these nucleic acids collected in the nucleotides, A, C, G, T, and from which in triplets and codons you have the 2021 amino acids. All life on Earth is based on this coding, reverses the error of entropy. On Mars, everywhere in a closed system, there is a tendency towards degradation and randomization. But in life, in the phenomenon of life, there is a persistence towards organization. So when Darwin, who was influenced by Adam Smith, had this insight on natural selection, all natural selection is driven by the pursuit of energy. I eat you, so I acquire energy. And if I use the energy more efficiently, I will reproduce, and I will eat you, then I proliferate. So when we see the natural world, there's a constant struggle for energy, even within the human body, there's a constant struggle for energy by the different cells, by the different organs. And when it goes out of kilter, you get a cancer, which gobbles up energy. And all solutions to cancer consist of denying that cancer energy. Same with human society. If you are a tribe hunting, gathering, there's only so much energy you can acquire. So the first energy revolution in human society was agriculture, because with agriculture, you are producing energy from crops. And if you're able to organize the great deltas, drain the swamps, irrigation canals, flood control, seed selection, grain storage, distribution, then you create a surplus of administrators and soldiers to conquer. And the more you grow, the more energy you acquire, until you reach a point where the cost of expansion is greater than the benefit of expansion. Then the tide turns back. The next energy revolution started here in Scotland when James Watt invented the steam engine to convert fuel, traditionally used only for heating, into mechanical power. There are steel markets, the iron markets in Singapore. They're all from Scottish cast iron. Entire bridges transported and reassembled in Singapore. One of the markets is still a tourism spot, La Passe in Singapore. Many of you would have seen it. All Scottish cast iron. How did the iron come about? Coal, which the British Isles had in plenty, conversion to steam, and that steamship, trains, changed the economy, changed the military equation. Then you had oil, and the power shifted to America. With oil, you have airplanes, you have motorcars, you have tanks. America's domination of the oil market, which peaked just after Yalta, when Franklin Roosevelt, on his way back on board the USS cruiser Quincy, stopped in the Suez Canal and for five days conferred with King Abdulaziz. And out of that conference, a key agreement was made that in return for the US protecting Saudi Arabia, oil would be denominated in US dollars. That grip is loosening. Abdulaziz's grandson, Muhammad bin Salman, is a clever man. He's diversifying, but slowly, because he sees a different future, as all of us see a different future. And when it comes to AI, the limit to AI is not what clever people can do to invent algorithms. The ultimate limit to AI is energy. Because to compute, to codify, to reverse the error of entropy, you need energy. But happily, happily, that energy is now ubiquitously available in sun and wind and other alternative forms, including small reactors. It can no longer be easily controlled by any central power. The Magnificent Seven thought they had luck, and American strategic thinkers felt that with AI now, the US can prolong its supremacy indefinitely. Then China suddenly came up with DeepSeek and made it an open-source large language model. And since then, all the other Chinese large language models like ChatGLM, like, uh, Kimi, MiniMax, they're all open source. It's become state policy in China. Why did China make it, uh, open source? Because they wanted the knowledge of AI to be quickly diffused into all sectors to reduce monopoly power. And in so doing, they benefited Singapore, they benefited the UK, if you want to use it, and others. It's open source. You adapt it with your own confidential information and apply it to your own specific circumstance. Now, this is interesting because the technology is available to everybody. Energy is available everywhere. What makes a difference between one country, one tribe, and another? It is the ability to organize and to emulate the negative side effects of technological change, to avert backlash, to make unnecessary counter-ideologies like Marxism. So the countries which are able to make use of the new technology and new forms of energy are those that can organize themselves socially. So we are talking about values, we're talking about politics, we are talking about social structures. And in Smith, there's this duality in his thinking. There is the invisible hand of the market, which works its magic through individual self-interest, but which requires, at the same time, a visible hand, which is the subject of his Moral Sentiments book. What is a visible hand? It's how a society is organized, its memories, its education, its laws, its ethical standards. It's within that framework that the invisible hand operates. But when that visible hand grows large and rigid, that visible hand curbs the freedom of the invisible hand. In some cases, when the hand dies, like a dead hand, it prevents change, and the result is, even though the technology and energy are available, there's little you can do about it. And this is the next phase of human history. How do you create an optimal balance between the visible hand and the invisible hand? And it's not static. It's a dynamic balance between the two. The Chinese have a beautiful saying that when you hold a small bird, if you grip it too hard, it dies. If you grip it too lightly, it flies away. And what is in your grasp? Your grip must constantly change with the bird. And the bird reacts to you. This is the art of economic management. It is not something which AI has a solution to. It is not a challenge to which textbooks can furnish answers. It requires human beings' willpower to be modest, to forswear hubris, who are connected to ordinary people, who know that every action the visible hand has invisible results affecting the welfare of large numbers. There's nothing new. This tension, this moral struggle, is as old as civilization. In the animal world, among social animals, the visible hand is hardwired, say, in the behavior of dogs or primates. But with human beings, it is reprogrammable in culture. And that's what makes us a different species. We're on a new threshold. There are new challenges. There are more questions. There are answers. And one can only hope that there are enough people, thoughtful worriers, who rise above the fray of daily stresses to look ahead and ponder the larger questions, as the Scottish and the as those from the Scottish Enlightenment once did. And I hope that Panmore House will again provide such a spark to a new enlightenment in the world. Thank you. [applause]

>> Uh, you did not let me down. Uh, George, that was, uh, a phenomenal, uh, speech that, um, covered time and space and Smith, and in a way that I think was true to the, as you just finished on, the legacy of the Scottish Enlightenment, which, which is still valuable today in understanding, um, our worlds as they are and where we're going. Um, the problem, though, with your speech was that there were so many things I wanted to ask you questions on, and I only have 15 minutes, and I do want to give others a chance to, to interrogate you, as it were. Um, please do, George will be here the next couple of days. Do ask him questions. But I think two things to say. One, one is, is, is people think of Smith and liberalism, and they often conflate it with the more recent liberal internationalism, which saw, um, the, the point of the liberal democracies in, in terms of how they've approached the, the global world, in terms of diffusing culture and values and political systems, um, as we see necessary. And there are various reasons for doing that. Um, but in Smith's time, the view of international affairs, as it were, um, was understanding that history and geography matter. That China, and Smith viewed China, they see it as a civilization with several thousand years of history, and understood the weight of that history, and understood how people value that history, and how it shapes individual behavior. And the Scots looked across different civilizations to understand this. Now, this doesn't mean that civilizations can't change and, and, and become different. Um, but it did situate a world where it's not that we're all converging to one kind of unified view of how society is ordered. But it is still important in Smith that we open and remain open to trade because we saw the value of that. The Scottish Enlightenment was, was nourished by the general European Enlightenment. I mean, Smith spent time in France, um, on his tour with the Duke of Buccleuch, um, learning from other French philosophers. Now, but bringing it back to where we are today. So you have on one hand China, and on the other, you have the United States. Now, me, as an American, I'm like, have a bias to be pro-American by default. Um, but also I have lots of respect for China, and I was recently there in China, uh, a month ago. And when I'm in China, when I'm in the United States, I'm not worried. I see two relatively dynamic societies that have ambition, have a sense of purpose, notwithstanding, in the United States, the politics, but that's a feature of democratic politics everywhere, but a sense of purpose and direction. Um, and in particularly in the current state, right? I mean, if you look talking about energy, I mean, the US is an oil, oil and gas superpower, and that's driving the AI revolution. It's also a continental economy. It could, it won't be, I don't think, like China in the terms of of a kind of a closed economy, but it could be. China, as you mentioned, has always had this thousand-year history of having borders, having the civilization, as you mentioned, the walls, the material walls, but also the digital walls that are put up. And, and if you like, the CCP is just another dynasty in the long running history of, of, of China. But where does that leave everyone else? Where does it leave Europe? Where does it leave the likes of Singapore? I mean, Singapore, I think, is adaptable in its size, but it's still small. Where does it leave, um, uh, the Middle East, which we've seen is now fracturing in a way that was, was not so six months ago? Where does it leave the other large country in the world, India, um, who kind of navigates, um, but also is is growing? Where does it leave these other, and I don't want to say use the term middle powers, where does it leave everyone else? Because you see some pockets of growth and innovation, um, here in Europe, but there's a general malaise, unfortunately, and there's a general lack of purpose, uh, and direction. [snorts] How do you see the rest sitting in this, where China and the US will be fine? Where is everyone else?

>> I'm not sure about the US.

>> Uh, when the US celebrated its bicentennial, it was just after I left Cambridge, and I remember the BBC series by Alistair Cooke, "America," which was reduced into a beautiful volume, which I bought at a considerable price for me at that time, but which I enjoyed greatly. This year is the 250th anniversary, and it's not celebrated in the same way as it was at the bicentennial. So if you take a timeline, there is a relative decline. And you ask yourself, where will the US be for its centennial? I don't know. No one knows. So there is this internal struggle in the US. Strategic retreat is painful. Elon Musk, for whom there's no problem which cannot be solved, he hated Dodge and he failed miserably. He was politically naive. Politics is difficult.

>> Politics in the US today is difficult. The US has energy of plenty, but Elon Musk said to build data centers, the approvals that you have to get from different levels is awesomely difficult. You know, China today produces more power than the US and the EU combined, and it's the graph is diverging. Near where my mother came from, along the Taiwan Straits, which is a wind tunnel. They're building windmills taller than the tallest building in Singapore, where the energy unit cost is half that of the Chinese average, which is already among the lowest in the world. What are they thinking of? Generating hydrogen and processing data from Southeast Asia through fiber optic cables. They are thinking like that, and they can do it because the regulations are permissive. The US has a visible hand which has turned rigid, and it's very difficult to do things requiring that hand to move. China, in contrast, in terms of international development, is still flexible. It will not be forever. Europe, I think, is in trouble because the energy costs in Europe are horrendously expensive, and with such high energy costs, the future of AI in Europe cannot be bright. And a lot of it is self-inflicted. I mean, to reach this position, Europe will have to review its policy on Russia, its policy on the Middle East, its policy on North Africa, from all of which sources there's energy in abundance just next door. But it's denying itself of all these sources of energy and being casual into buying American energy instead. Why is this happening in Europe? Because the politics in Europe have become dysfunctional. So again, it is Adam Smith's first book which provides an insight, not the second book. If you ask me about India, India is different from China. It's got a different history, different social structure. It's heterogeneous, but it's also determined to be an AI power. It is not well-endowed in energy naturally, but exhausting the cheapest energy available, and is going to solar in a very big way.

>> I think India, with its population and its brain power, will eventually be an AI power too. Brazil, maybe, because they have the girth and the people. Africa is a different story. Africa is in the earlier phase, which can benefit from the development of other countries. So we'll see. We don't know this. This is, I mean, history is a history of institutions and political change. So we mustn't think that there's any set of rules or any institutional structure which is perfect for all times. It may work for a while, then it ages, and it's hard to rebuild. Then you're stuck. The hand ages.

>> I, I, I like what you said about about China, because there is the perception that America is free and liberal in many ways, but actually it's constrained in many ways by by regulation. And people forget, for all the talk of how top-down China is, there's actually quite a bit of freedom and liberalism that allows people to, you know, entrepreneurs to to innovate and to to move in a direction. Of course, there's state involvement, but there's state involvement everywhere. And I think that's important not to be naive about these different parts of the world. Um, now, we have room for a question or two, not a short lecture, a question for George. I see hands going up. I'm going to go to to first to David. Um, Euan, and then we'll get, uh, uh, Euan.

>> Thank you for a brilliant lecture. Um, and I would like to take away your view that, you know, China, because of homogeneity, really doesn't have an expansionist strategy or interest. But if you care about democracies versus autocracies, you might want an insurance policy just in case you're wrong about that. But but the question is, what probability would you put on the fact that China, you know, lives behind walls, wants to stay behind walls, and does not want to be expansionist in a way that could really harm democracies in the rest of the world, through Southeast Asia?

>> Well, what is the essence of democracy? If we go back to the Greek origin of that word, it is governance, uh, for, by, of the people. If you compare China, the US, with India, they're not done badly. You don't judge a society by how thick its billionaire class is, or how well they live. You judge a society by the condition of its bottom 10%. And I would say that the bottom 10% of people living in China fare better than the bottom 10% of any other major country on earth. So is that democracy? Is that not democracy? I think it's something worth discussing.

>> Question for for Euan. Um, the microphone has disappeared.

>> Oh, there's Matt.

>> Well, just for the for the recording, please. Yeah. Thank you.

>> Uh, thanks, George. You did pick up a lot on how AI has to be in an area that has energy and the support of energy would make a prosperous AI. What do you think of what's happening in the Gulf now with the states and the sovereign funds investing very heavily in the infrastructure of AI, and how that's going to kind of put a different diversification for those areas?

>> Well, power in the in in the Middle East is heavily concentrated in a few hands, both political and financial power. And to develop technology, we import large numbers of foreigners. And the result is non-organic development. So if you look at, say, Abu Dhabi, Dubai, when the foreigners leave, you're in trouble, and you need them to come back. In the end, what you need in the Islamic world is development from within, organic development. And Muslims have to find their own way to the future. AI has values embedded into the weights. You can't have AI in the Middle East, which responds to a question, "Print me different pictures and cartoons of the Prophet." Just as there are certain questions you can't ask of AI in America, or of AI in China. So in the end, the Islamic world, using paper from China and using AI now from outside, will have to evolve its own pathway, its own enlightenment into the future, for which we have to look into the three big population centers, which is Egypt, Turkey, and Iran, and three different dramas are now ongoing.

>> So I'm going to, I'm going to take two more questions. So first, Eamon, um, so behind you, Eamon, there's a microphone, and then I'll take one more after that.

>> Hello, Eamon Butler from the Adam Smith Institute. Um,

>> AI.

>> Adam Smith Institute. Okay. They're not a competitor.

>> Thank you. AI, not at all. AI and, uh, China. You mentioned paper, how it made new ideas possible. Um, the Enlightenment, obviously, made new ideas possible, um, and broke down, uh, traditional relationships of the elites and of, uh, governments and the church. Um, AI must do the same thing. Uh,

breaking down elites. Uh but how is China going to resist uh to preserve its homogeneity? How is it going to resist the liberation which AI would give to its own people?

>> Fantastic question. I don't know. They they themselves don't know but they know it's going to be a huge challenge. And if I if I go into a small detail, it's not a small detail. It's a very important point, but it's not reported at all in the Western media.

China is controlled by the Communist Party, which has a monopoly of political power. The Chinese Communist Party exercises authority north, south, east, and west. And there's major departments like the central military commission which controls the PLA. It's got the organization department which controls talent. It's got the communication department which controls all media including the internet, museum, cinema halls. It's got the international relations. And recently they established three years ago a new department called the social works department. So even though social affairs are the prerogative of ministries in the state council, the communist party sensing that new technologies will create new tensions in society have decided to give it political attention. And it's quite interesting. I was in my old ancestral village recently and every fifth Luna month they have the dragon boat race and this time they make sure that all the previous party secretaries turn up because they said to effect change you must bring the people from before along because otherwise they'll resist change. And every time there are social problems, they are hyper sensitive. Hyper sensitive. I know this personally because I'm trying to take over my grandfather's house and it's a complicated political exercise. Why? Because the consent of the people living there must be sought. It may appear authoritarian, but at the grassroots, China is not an authoritarian society. There's great sensitivity to social needs and social concerns. They do not know what the future will be, but they know that what they're embarking on will turn everything upside down.

There was an equivalence when the internet was open up in China. I was at that time the minister for information regulating the internet in Singapore. They sent a high level delegation of many ministers to Singapore as my guest for for one week. They did nothing else but work morning, afternoon, evening. They didn't go shopping. They didn't go sightseeing. By the end, they left. They knew aspects of Singapore that I did not know or that I did not care to know. And I was mystified. I said, "Why did they do that?" 3 months later, they issued their paper on the internet. I did tell them that you can always control the portals. You can always control the major sites. Without that policy change in China, you won't have Huawei, you won't have Alibaba, you won't have PU. So they are taking the same experimental approach deciding how much should be the visible hand and how much should be the invisible hand in promoting the growth, the healthy growth of this sector.

>> I I said I would take another question, but unfortunately I have to keep the time otherwise I'll get in trouble. Um, I could keep asking George questions. Um, I think it was a fascinating uh opening to our to our conference and to our next panel which continues the theme of geoeconomic competition and the new wealth of nation. So, if we could just give George a nice well warm.

[applause]

Thank you so much. Excellent. Thank you.