Nobel laureate Joseph Stiglitz surely ranks as the world's best-known living Keynesian economist, and not because of his academic work on information asymmetries or the Shapiro-Stiglitz model of efficiency wages, either.
It is thanks largely to 'Globalization and its Discontents' that the one-time chief economist at the World Bank came to the attention of the wider public. Thanks to unexpected provenance, this book - first published in 2002 - found a ready audience in what much of the left, with traditional hyberbole, at that time called the anti-capitalist movement. I'm reading it now, incidentally, because it is the set text for a course on emerging market economics I am taking next term.
For reasons this volume makes quite clear, the term 'global justice movement', these days in wider use, is a rather more accurate designation of the target market. While many activists from a range of backgrounds - including trade unionists, environmentalists, small farmers, Christians and anti-poverty campaigners - have over the last decade or so been moved to street protest against the negative impact of globalisation, only relatively small numbers of far leftists did so on the basis of rejecting capitalism as such.
As Stiglitz repeatedly points out, there have been wide-ranging and important upsides to globalisation as a process; at the very least, it has facilitated the creation of a global civil society that promotes democracy, civil rights and social justice worldwide. It is indubitably a more progressive brand of capitalism than economic nationalism.
What has rightly generated the anger is the absolute prioritisation of the interests of finance capital over any other consideration. From Latin America's 'lost decade' of the 1980s to the debilitating transition to capitalism in Russia and the Asian financial crisis of 1997-98, the interests of the majority of the world's population have been systematically disregarded.
All of this underlines just how poor the track record of free market orthodoxy since the Reagan-Thatcher revolution really has been, especially in the field of development economics. No matter how immaculate a theory is, it really is essential to give an occasional glance at the result.
This is a technocratic critique, unsurprisingly given its authorship by a technocrat. Much of the book is taken up with an account of ongoing turf war between the World Bank - where Stiglitz worked - and its Washington rivals, the International Monetary Fund and the US Treasury. It's always nice to get suspicions confirmed by an insider account, even if the broad outlines are already widely known.
Stiglitz's case is essentially that the Bretton Woods institutions have lost their original Keynesian mission and have been subjected to regulatory capture by Wall Street. The remedy, he proposes, is to democratise the governance of the International Monetary Fund, the World Trade Organisation and the World Bank, in a move towards a broadly Keynesian globalisation. Some of his insights into such technical areas as capital market liberalisation offer useful detail.
For anybody on the Marxist left, none of this is anywhere near savage enough; although Stiglitz recognises many of the problems with market economies - the unchecked pollution, the failure in most countries to provide universal free healthcare or education, the increasing inequalities - he does not regard capitalism as, say, inherently exploitative or by nature imperialistic.
But then, perhaps he doesn't answer these indictments because he doesn't have to answer these indictments; socialism is not popular enough to command mass support, and can thus simply be factored out.
In one of the most interesting passages of the book, Stiglitz makes quite clear what is keeping the world's ruling elite awake at nights, and it is not the spectre of the revolutionary left or even the organised working class.
A section headed 'The most grievous mistakes: risking social and political turmoil' reveals a profound fear of an undifferentiated 'poor'; stop subsidising their food and fuel and they trash things, as Indonesia's Suharto found to his cost. Interesting choice of emphasis, no? Policies that might allow that sort of thing to get out of control constitute the IMF's worst possible blunder.
Other sections on the fate of the 'transition economies' had me reflecting on the standard Trotskyist argument - I used to push it myself - that 'proletarian property relations' are inherently superior to free markets.
Well, yes and no. Clearly, Russia in the 1990s suffered economic devastation unparalleled by any major economy in peactime; on the other hand, the Polish working class is clearly better off both economically and in terms of its civil rights than it was under Stalinism, and any balance sheet of China's shift away from central planning has to be broadly positive.
Given its subject matter, 'Globalization and its Discontents' is not a lightweight read. But this is intelligent and well-written Keynesianism in popular guise - a genre developed by Galbraith - with much that leftists need to take on board, if only because the arguments have been taken up by the mainstream of the very social movements many are now orienting towards.
Posted at 14:56, 24 March 2008
Comments (2)
It's worth noting Stiglitz is a member of the elitist and uber-neoliberal grouping, the Montpelier Society. Like you, Dave, I think Stiglitz is worth paying attention too, as are most social democratic critiques of neoliberalism. However, I would place Stiglitz on the softest of the soft part of the social democratic spectrum for a couple of reasons.
1) He believes the inflation and debt reduction measures the IMF and World Bank foist on recalcitrant kerb inflation - a key neoliberal obsession.
2) He believes privatisation can be a good thing. By selling off publicly owned industries that state can better focus on core services and functions.
3) Stiglitz believes neoliberalism is a purely ideological phenomena. This is overegging the pudding a great deal. As Marxists have long been aware, neoliberalism is a strategy aimed at strengthening the scope and dominance at the expense of labour. If Stiglitz was to admit this, it would mean breaking fundamentally from his Keynes-lite perspective.
Dave, I can't claim to have the depth or breath of knodwledge about economics that you obviously have, but I do wonder if capitalism isn't a short-term solution? Is there any proof that it can be managed effectively in the long-term? With regard to teh newly-capitailizing countries, what will happen in twenty or thirty years time? Having said that, state-run industries didn't do so well in those nations, but this is where politics comes in. State ownership of the means of production is meaningless without active, political democracy.