Friday, June 07, 2019

The very convincing Stiglitz

Joseph Stiglitz has a very lengthy piece at the TLS, reviewing three books on capitalism but with a lot of his own commentary.

It's a great read.   Wasn't Judith Sloan sneeringly rude to him when he was out in Australia last?   When she can write as well and as convincingly as him, rather than being an overpaid free market shill for a billionaire's loss making vanity paper, I'll reconsider their respective merits.

Some extracts I liked:
By now it is clear that something is fundamentally wrong with modern capitalism. The 2008 global financial crisis showed that the system as currently constructed is neither efficient nor stable. If a slew of data hasn’t already convinced us that during forty years of slow economic growth in advanced economies the benefits overwhelmingly went to the top 1 per cent – or 0.1 per cent – the anti-establishment votes in the United States and United Kingdom certainly should. The mainstream economists, central bank governors and “centrist” Blairite and Clintonite politicians who set us on and maintained this dismal course and confidently pronounced that globalization and financial-market liberalization would bring sustained growth and financial benefits for all, have been soundly discredited.

Considering the devastation wrought by misguided financial policies over the past decade in particular, one might reasonably have expected a revolution in the economics profession akin to the Keynesian one in the aftermath of the Great Depression. But we tend to forget that, back in the 1930s, as the economy sank ever deeper into depression, many economists in the US and UK stuck to laissez-faire. Markets would correct themselves, they said; no need to meddle. And even after John Maynard Keynes brilliantly articulated what was wrong, and how government actions could set things right, a great number of economists did not want to follow his prescriptions, out of ideological fear of excessive government intervention. So it is no surprise, really, that the economics profession’s response to the 2008 crisis has been slow and halting.

And then this:
Our current economic system is often referred to as capitalism, a term – as Fred L. Block points out in Capitalism: The future of an illusion – that the left once used pejoratively and the right now champions as if it’s an unchanging and noble framework that delivers miraculous, never-ending growth from which everyone benefits, or would if only government didn’t interfere. But all the underlying premisses of this blanket term are wrong: no economy, and certainly no modern economy, has a private sector that functions in a vacuum. The government is right there alongside it, enacting rules and regulations, enforcing trading standards, backing up the banking system and stabilizing the market economy. Capitalism isn’t one, rigid system. It’s ever changing. And the promises made by its most reductive advocates – that deregulation, privatization and globalization will bring wellbeing to most citizens in all countries – have proven to be horribly wrong. (Globalization, to its credit, has contributed to the enormous decrease in global poverty: the successes in East Asia, in particular in China, where some 740 million have been moved out of poverty, wouldn’t have been possible without it. Still, mismanaged and inequitable globalization, with large agriculture subsidies for corporate farms in the advanced countries, has hurt the poorest of the poor: rural workers in the least developed countries.)

Two other crises accompany the crisis in our economy. The first is a crisis in our democracy, for the two are inseparable. It is through our political system that the rules of the economy are set, and when the outcomes of those rules are unacceptable – as in the 2008 crisis – the consequences must be addressed, and addressed through radical change. And those kinds of changes have to be made through the political system – otherwise, matters will only get worse, especially when a third interconnecting crisis is taken into consideration: the environment. Unfortunately, none of these books faces up to our system’s failure to address the existential question of the moment: climate change.
But read the whole thing...


4 comments:

John said...

Remember the occupy movement? Or Piketty? All gone now, just settle back to the same old economic dogmas while the city burns to the ground. The coalition got elected for their economic performance just as the economy is going off a cliff. Neocons celebrating Trump's tariffs even though they have long been opposed to tariffs. Crazy stuff.

It is not a dichotomy of capitalism vs. socialism. All advanced countries are mixed economies. We don't even need a model but that will upset some economists. We need economists who think more like doctors than theorists, who can provide solutions for specific ills rather than being obsessed with creating the perfect economic model.

anon said...

Stepford, the stig is an idiot. The stig was peddling that Venezuela would be a success. He was also making stupid comments about the GFC. Stop trolling the Stig as it’s embarrassing.

anon said...

Stepford, the stig is an idiot. The stig was peddling that Venezuela would be a success. He was also making stupid comments about the GFC. Stop trolling the Stig as it’s embarrassing.

GMB said...

The Stig may not always be great anon. But can you fault even a word he says right here?