Stiglitz is a Nobel Laureate, worked for the world bank and a chief economist under Clinton - His new book, Road to Freedom, looks at the role of the state and the idea of freedom, and his theories of Progressive Capitalism. That there are no free market he said, we have the rule of law, property – there are always trade offs. He recommends that the enlightenment of 250 years ago should be taught in schools. It’s the reason we live better today.
He is critical of both Milton Friedman and of Friedrich Hayek and his book Road to Serfdom (1944), being taught at Stanford, and who influenced both Reagan and Thatcher in the 80s. “Keynesian economic markets have failed, with one out-of-four unemployed. Government spending could improve economy. . retirement security made a difference and the NHS. In America the private sector has failed, with 20% GDP on worse healthcare outcomes.” Friedman argues that government’s greater role and social benefit will lead to authoritarianism." He talked of Authoritarian capitalism, when counties have too little. By contrast in the Nordic countries, there is the strongest support for democracy.
He spoke of American ideology and mythology around freedoms and the American revolution. Slaves are not free. And who is going to rule? What do we mean by freedom? What do we mean by freedom to do?. Recapture the nation. Freedom for potential and to achieve.
“Should everyone have the right to own an aK47 – means others loose their freedom to live. There is also the freedom from fear. Every school now teaches what to do if a gunman enters the school. Which freedoms are more important? Freedom to live is more important.”
He spoke of examples – such as traffic lights, that take away your freedom and are restraints. “In a city if there are no stop lights there is chaos. Therefore traffic lights give people more freedom to do. The recent Pandemic – there were good vaccines paid for by government, a quick response. People have to pay taxes, taxes are a restraint. Some restraints will increase freedoms.”
His book looks at the issues around capitalism and freedoms. He argues that the Keynesian theories that free markets are efficient and lead to democratic markets, is disingenuous. He spoke of Pinochet in Chile – who was advised to force radical ideas on banking – but it will take twenty years to get out of the mess! “These theories are about creating inequality, to exploit. Free to choose. Free to Exploit. No competition laws. These ideas were wrong – economically wrong. Freidman was very successful selling an idea of unrestrained markets.
Neo Liberalism)- for successful economies and Thatcher/ Reagan followed. That market forces would lower costs. That profits will increase by scamming people and maximising profit and this is not a well being society.” Bankers get rich.
He spoke of the influence of Adam Smith (the great enlightenment theorist here in Edinburgh) and the invisible hand, will lead to successful societies. The force for innovation. And why you need regulation to direct that force. That the markets are not operating adequately.
Stiglitz spoke of the impacts of the Scottish enlightenment thought. “How do we reason about society. We need checks and balances – and no government is perfect. We need Collective administrations and restraints. And then we can expand everyone’s freedoms. Books 1 to 3 – unregulated: Books 4 to 5 – Role of the state.”
Clinton and Blair, followed this free market thinking. “Clinton felt their pain”. But the de-regulation of the Banking system led to the Banking crisis of 2008. The banks made a lot of money.
Why haven’t Progressive ideas won?” “Neoliberal ideas are very profitable for a few people. Climate crisis, poverty crisis. Unrestrained markets are problematic. Failings are now so great, that Progressives might have a moment. But disaffected areas are moving to support Trump – but Trickle–down economics has failed; socialism has failed, communism has failed.”
**QUESTIONS
Are you hopeful? - His book is based on the hope that this battle can be won. He spoke of his theories of Progressive Capitalism. Governments owning means of production, and that control management, requires too much information. We must de-centralize – for care economy and to innovate. Progressive ideas can be ideologically complex. He spoke of the growth of misinformation. And the struggle between individual rights as opposed to collective rights.
Deficits? - Two thirds trade surplus economies: one third trade deficit economies. Sum of deficits, equals sum of surpluses. He advocates a Global Reserve Currency. Deficient global demand. There is deficient global demand.
Are Enlightenment ideas settled? – Only absorbed by a minority of the population. The education system should explain the enlightenment of 250 years ago. It’s the reason we live better today.
Does every society need an underclass? - More people locked up here in Britain then any other developed country - and 25% to 30% are from children’s homes. “Some degree inequality is inevitable – but we don’t need such extreme inequality. There is 20% poverty in America.. In equality is a choice.. Biden has reduced childhood poverty with programs he introduced.”
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