Joseph Stiglitz: How to Save Capitalism
While most of the blame for the ‘Great Recession’ clearly lies with those who work in financial markets, Joseph Stiglitz writes in the latest issue of the LRB, economists shouldn’t be spared their share of it. It was after all economists who pushed the bogus view that markets are efficient and self-adjusting, even though ‘economic theory never provided much support for these free-market views’. ‘Adam Smith’s hand was not in fact invisible,’ Stiglitz says: ‘it wasn’t there.’
Fiscal stimulation, as advocated by Keynes in the 1930s, stopped the recent recession from turning into another depression. But now the financial markets that caused the crisis in the first place are telling governments they need to rein in their spending to cut their deficits. ‘In many quarters, the Keynesians, having enjoyed their moment of glory just a year ago, seem to be in retreat.’ But Keynes’s insights, according to Stiglitz, are needed now more than ever. ‘Keynes’s great contribution was to save capitalism from the capitalists,’ Stiglitz writes. It remains to be seen if he can do it again. More
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