am 29. September 2011
Joe Stiglitz speaks out again - eloqently, forcefully, convincingly. He is, in the words of Paul Krugman (New York Times), "an insanely great economist". His new book is nothing less than an intellectual settling of accounts with Wall Street, America's money-grabbing elites, and with Washington, the country's hotbed for corrupt politicians who deem themselves economic experts. Siglitz relentlessly takes them to task, blaming them for the disaster that has befallen the finanical world and exposing their professional incompetence in times of turmoil. The bubble has popped, but, as the author makes clear, it is not the capitalist system per se that has failed - the system is sufficiently flexible and has proved adaptable to serious challenges more than once -, nor are the monetary institutions of the Federal Reserve or the World Bank malfunctioning. It is the misconduct of chief executives and central bankers whose selfishness is about to ruin the country, dragging other countries into the abyss. In the spectacular crashes of Enron, World Com, and Lehman Brothers or in the blatant manipulations of Bernie Maduff, this conduct has been nothing short of criminal. What, in Stiglitz's view, conduces to unethical practices and aggravates the crisis is, more than anthing else, the "madness" of excessive deregulation.Under the guise of liberalism deregulation has caused the laissez-faire policy (ushered in by Maggie Thatcher and Ronald Reagan in the 1960s) which is now coming to fateful fruition. Carried to extremes, it has fostered a set of popular expectations to the effect that in a free market economy everybody expects everything to be up for grabs - commodities as well as consumer goods, public space as well as natural resources. In a real estate market totally out of sync with reason and realism the latter-day robber barons have wrought havoc in a way that is unprecedented. It will take the country a long time to recover.
However, while unabashedly chiding the US monetary establishment, Stiglitz does not rest content with criticizing the free market ideology of Adam Smith's disciples. As economist he is also a humanist and a moralist. He addresses himself to the issues of moral values and societal trust. In a chapter entitled "Toward a New Socity" he delineates prospects for a future guided by the principles of solidarity and fairness. It is rare that contemporary economists venture into this field. All the more reason for the public to take note of this remarkable book.