The Road to Freedom: The Economy and the Good SocietyBy Joseph E. Stiglitz, WW Norton & Company, 384 pages, $29.99
Joseph Stiglitz, former chief economist at the World Bank, believes that taxation is not a threat to freedom but a prerequisite for it. He argues that the current political problem is as follows: road to freedom, the right (which, for Stieglitz, includes liberals as well as conservatives) rejects the Founding Fathers' idea of taxation without representation in order to oppose any taxation whatsoever. He goes on to say that this is the problem. Because market failures are more widespread and severe than “neoliberals” (people like Stieglitz’s fellow Nobel laureates Friedrich Hayek and Milton Friedman) acknowledge. For Stieglitz, redistribution and regulation are the true paths to freedom.
Much of the book is devoted to a critique of neoliberals, which Stieglitz defines as neoliberals who support “unregulated, free markets.” In Stieglitz’s view, “free markets, competition, and a neoliberal economy combined with liberal democracy” are not enough. A “stable balance” “requires strong guardrails and broad social consensus on the need to curb wealth inequality and curb it.” “The role of money in politics.”
This book is written as if the regulatory state had not expanded after World War II and as if the welfare state had been dismantled in the 1980s. It is written as if all liberal democratic economic policies were written by someone with the same world view as Argentine President Javier Millais or Brazilian MMA fighter Renato Moicano, who competed at UFC 300. declare Anyone interested in freedom should read the works of liberal economist Ludwig von Mises. It's written as if we're still in that world. Lochner An era in which the Supreme Court regularly struck down economic regulations.
But that is not the era we live in. Instead, the state has continued to grow because it has not reached the level of influence that neoliberal proponents desired. A more consistent argument, although not a good one, is that modern states are big, but they need to get bigger.
Nor is this book a good guide to the views of “neoliberals” like Friedman, Hayek, and Mises. A lack of rational interpretation of these authors would mean that they do not believe in market failures. However, Stiglitz argues that neoliberals think that “markets themselves are efficient and stable.”
Stiglitz also argues that “free markets designed according to neoliberal principles effectively [the U.S. and U.K.] You might expect an economist of Stieglitz's caliber to take the effort to support this claim, but his book provides no evidence for this. evidence Stieglitz claims to have reversed this. In other words, it is state control of the economy that suppresses democratic freedoms. There are other disturbing empirical studies, including one showing the neoliberal ‘Washington Consensus’. works pretty well and there no clear evidence Economic freedom creates more inequality. (however, abundant evidence Economic freedom makes us who we are. richer.)
This book contains many reasonable ideas. Stiglitz is certainly correct that challenges related to global fisheries, pandemics, and climate change are fertile opportunities for further economic analysis. And the notion that market failures are more complex and more common in an increasingly interconnected world should be a starting point for economists and policymakers.
Unfortunately, Stiglitz is too comfortable asserting that the solution to these problems is “regulation” without adding much explanation as to how regulation should solve those problems. Here he should have engaged more deeply with the insights of Elinor Ostrom, another Nobel laureate in economics. Stiglitz refers to Ostrom's work on the regulation of the commons, that is, shared resources that anyone can use (which can be overused if there are no rules governing how people utilize the resources). However, he sees her work as an advocate for “regulation” and a critique of private property.
That's not what Ostrom argued. Rather than a condemnation of private property, Ostrom argued, it was an empirical question about whether private property, communal arrangements outside the state, or government control was the most appropriate way to manage the commons. And there is nothing in Ostrom's work that suggests a broad critique of private property. Her work is entirely within the same classical liberal tradition that includes Hayek and Friedman.
Ostrom argued that public goods are not only provided by government. She also emphasized the importance of polycentricity, where multiple levels of governance provide opportunities for citizens and non-profit organizations to provide public goods, where each level can act both in cooperation with and independently of the others. This is especially useful for thinking about how to solve tangible problems. complex externalities Stiglitz sees it as widespread. Ostrom even developed a polycentric approach. weather change.
The call for regulation is less fundamental than asking which political consensus, public, private, or communal, generates the most appropriate rules. Elinor Ostrom and her husband, Vincent Ostrom, emphasized the value of federalism as a laboratory for democracy. Because they, like Hayek, we I do not know A way to solve many pressing problems. The book might have been more persuasive if Stieglitz had spent more time exploring those insights instead of spending so much time criticizing neoliberalism (and exaggerating their influence).
Stiglitz's argument is unlikely to change anyone's mind, but it will probably find an audience among those already inclined to agree with it. His ideological fellow travelers will probably love his sweeping defense of “progressive capitalism” (basically modern Sweden, with its combination of a generous welfare state, pro-labor policies and a market economy). But Stieglitz doesn't explain why America isn't like Sweden or how we can get to Sweden from where we are now. Stiglitz also failed to mention that Sweden, which ranks highly on the Heritage Foundation's Economic Freedom Index, is rather open to policies promoted by neoliberalism.
If you are interested in understanding market liberalism, Peter Boettke's fight for a better world or by Deirdre McCloskey and Art Carden. Leave me alone and I'll make you rich, each explains what classical liberals mean by freedom. If you are tempted to accept the idea that neoliberalism lacks moral sense, here are some benefits, in particular: humanities engineering—Written by Bart Wilson and Vernon Smith, another Nobel Prize winner, this book articulates the rich moral framework of the Adam Smith tradition. And for a more persuasive empirical critique of capitalism, see Daniel Bromley's possessive individualism Explains how modern capitalism differs from the capitalism of Adam Smith's day and from half a century ago.
But even the currently tightly regulated variety of capitalism is better than countless real-world alternatives. After all, if the situation in America were as bad as Stieglitz claimed, you wouldn't expect so many people to do so. I want to move here. The border 'crisis', a problem caused by excessive regulation, suggests that the US has pretty good institutions. Or at least people think the institution they are leaving is better than the one they are leaving. And what they leave behind is a decline in economic and political freedom.