Famed economist and Nobel Laureate Joseph Stiglitz speaks out against right-wing notions of economic freedom
by Dan White
Nobel Prize-winning economist Joseph Stiglitz wants to reclaim the concept of freedom from right-wing Americans.
On Tuesday, Stiglitz, University Professor of Economics at Columbia University, drew a large and enthusiastic crowd to the London Nelson Center in downtown Santa Cruz, where he spoke of the need to recapture the language of liberty from conservatives while working for a more just and equitable society.
In Stiglitiz’s new book, The Road To Freedom: Economics And The Good Society (W.W. Norton & Co.) he delivers an impassioned critique of America’s economic system as well as the political ideology behind it.
During his dialogue with Chris Benner, Professor of Environmental Studies and Sociology at the University of California, Santa Cruz and Director of the Institute for Social Transformation, Stiglitz blamed the inherent selfishness behind “Free” and unfettered markets for the crisis of inequality in the United States as well as the environmental and opioid crises.
Stiglitz argued that free markets have led to the exploitation of consumers by encouraging monopolies, while leading to a vicious cycle, creating wage disparities that foster bitterness, resentment, and division.
This pervasive anger and frustration fuels populist movements that have led to a cultural backlash against the idea of mutual aid and shared responsibility, he said.
But Stiglitz’s talk, which was co-sponsored by the Humanities Institute, the Institute for Social Transformation and Bookshop Santa Cruz, left some room for hope. Stiglitz shared his optimism that the younger generation of problem-solvers – including his students at Columbia University – will look at today’s bleak status quo as a provocation to foster a more just and equitable alternative to a landscape of greed and division.
Stiglitz told Benner that he decided to write his new book as a rebuke to two books that are cornerstones of American conservative economic policy: Milton Friedman’s Capitalism and Freedom and Friedrich Hayek’s The Road to Serfdom. Stiglitz accused Friedman and Hayek of “fundamentally misunderstanding the concept of freedom” by equating the notion of free enterprise with human liberty.
The ideas of Friedman and Hayek have had a profound influence on policy dialogue, laws, and legal frameworks, as well as a significant impact on human behavior, Stiglitz said.
“As a result, the predominant economic doctrine has been neoliberalism—liberating banks and firms to operate without restraint,” he said. “I believe this set of ideas has contributed to our current problems: rising inequality and slowing economic growth.”
Quoting the British philosopher, historian and political theorist Isaiah Berlin, Stiglitz cautioned that “freedom for the wolves often means death to the sheep.”
“The term ‘neoliberalism’ describes the dominant economic doctrine associated with Ronald Reagan,” Stiglitz said. “The idea is that if you strip away regulations, you will get prosperity for all. Actually, there is nothing new about neoliberalism in spite of the ‘neo.” It’s totally old. It’s the idea of deregulating banks so they can engage in any sort of predatory behavior and strip away regulations on pollution so we can all choke.”
“That was their basic doctrine,” Stiglitz said. “The idea was that it would lead to vast economic wealth. Because of this mysterious process called ‘trickle down economics,’ everybody would be better off. Well, we’ve had this for 45 years and it hasn’t worked.” He cited the woes of the middle class and the slowing down of growth in the past few decades as evidence that neoliberal economic ideas have failed.
Stiglitz argued that unchallenged beliefs in an unconstrained free market actually undermine economic structures. “For markets to function effectively, there must be a strong foundation of trust and honesty,” Stiglitz said. “ A significant part of the economy, particularly the care economy, involves caring for young children and health care for the aging population. In these areas, selfishness often fails to yield positive results.
“Imagine how our economy would operate if everyone behaved like Donald Trump, who has a history of cheating those he deals with,” Stiglitz continued. “His contractors often end up in lawsuits just to get paid. Such a scenario would make life miserable, and the economy would struggle to thrive. Currently, Trump is an exception, but the economic system tends to reward those who act in self-interest, which discourages the values of care and cooperation. We need to emphasize the importance of care in our economic framework.”
COVID, masks, and individual freedom
When Benner asked Stiglitz about inspiration to write The Road To Freedom, Stiglitz mentioned the angry Americans who resisted wearing face masks during the early stages of the COVID pandemic.
“There was a lot of discussion about whether wearing masks and getting vaccinated and social distinging was an infringement on individual freedom,” said Stiglitz. “As somebody who is a little bit older (Stiglitz is 81), you worry about somebody giving you COVID-19 and that having very dire consequences. The freedom for someone to walk around unvaccinated and not wear masks and not social distancing was hurting my freedom to live.”
Part of Stiglitz’s critique of the right wing’s conception of freedom has to do with the conservative tendency to consider individual freedoms in isolation and without concern for consequences for other people, he said.
“We live in a society,” he said. “We don’t live in isolation. So you start thinking about so many other issues, such as the right to carry an AK-47, which impinges on someone else’s right to live. School kids are living in a world of fear, and freedom from fear is one of the core freedoms that (Franklin Delano Roosevelt) talked about.”
The hidden costs of unbridled freedom
In his talk in downtown Santa Cruz, Friedman pressed his argument about certain necessary constraints to unbridled individual freedom. In his view, such restrictions actually increase freedom by serving the wider good.
“Traffic lights might be seen as a form of coercion because drivers cannot proceed across an intersection until the light turns green,” he said. “It’s coercing you not to go. That’s a real restriction on your freedom. But in New York City, if there were no traffic lights, you couldn’t move anyway. There would be total gridlock.”
Therefore, this form of ‘coercion’ actually maximizes freedom by expanding “the opportunity set’’ of most drivers, “making it so they can actually go across the intersection,” Friedman argued.
Friedman likened taxation to the New York City traffic lights; it can be construed as a form of freedom, but taxes, by funding COVID-19 vaccine research, actually abetted freedom by saving lives.
Reflecting the values of UC Santa Cruz
After the presentation, Professor Benner spoke of the various ways in which Stiglitz’s work has informed his own research, while exemplifying the ways in which the Humanities can help students develop real-world solutions to the most pressing problems of our time.
“I have known of and learned a tremendous amount from Professor Stiglitz’s work since I was a graduate student in the 1990s,” Benner said. “Much of my research is on the information economy and information society, and his work in information economics is seminal. His more recent work on growing monopolization in the economy has been critical in informing my analysis of the development of high-tech industries and Silicon Valley.”
“I would also say that actually moving down the road to freedom to the progressive capitalism that Dr. Stiglitz so brilliantly lays out will require shifting political dynamics,” Benner said. “This will require many of the ideas in his book to become common sense in the broader discourse. The Humanities are essential for helping us understand how neoliberal concepts have become deeply embedded in our culture and belief systems, and how we can help shift those going forward.”
Original link – https://news.ucsc.edu/2024/09/stiglitzucsc.html