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Contributions from
the Column
Media
Economic myths:
A book worth reading
Africa:
State of the debate
Second World War:
A forgotten chapter
UN reform needs to promote global governance
8-9/2005 |
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Economic myths:
A book worth reading
Joseph E. Stiglitz:
The Roaring Nineties. A New History of the World's Most Prosperous Decade.
New York, Norton 2004, 432 pp.,
$ 15.95, ISBN 0393326187
No, it is not easy to picture Joseph Stiglitz as an advisor to German Chancellor Gerhard Schröder. But why is that so? Why does the German Council of Economic Experts not contain people like the winner of the 2001 Nobel Prize in Economics? The question is all the more justified as Stiglitz is not only a former chief economist of the World Bank; he has also served as a top economic adviser to President Bill Clinton of the United States. And like Schröder early on in his term of office, Clinton was also convinced he was pursuing an economic policy unburdened by ideological baggage and conflicting loyalties. He believed that his was a policy of consensus in which everyone concerned agreed on the “correct” courses of action to take. This claim was ridiculous, Stiglitz says now, but it worked well for those whose interests it served.
Stiglitz expresses harsh criticism for the policy he himself helped to shape. His book looks at the stockmarkets’ boom of the 1990s and investigates the causes of their subsequent crash. It is a frankly self-critical work, penned by a US citizen deeply concerned about the direction in which his country is heading. Addressing an issue at the heart of international debate, Stiglitz examines the question of how big – or how small – a role the government should play to help create a more just society. However, what Stiglitz particularly wants to put across are the economic lessons of the Clinton era – the realisation, for example, that the economic crisis that followed the boom was manifest particularly in the markets where deregulation had progressed furthest: the energy sector, the capital markets, telecommunications.
This is a riveting book and a sincere one, written out of a desire to educate and inform. Stiglitz is convinced that democracy can only function if the public understands the fundamental problems affecting society as well as the workings of government. This book makes an important contribution to enhancing that understanding.
It is a pleasure to see Stiglitz dispelling economic myths. Tax cuts as a key to greater productivity? Nonsense, they work only if coupled with real investment. Deregulation as a recipe for more competition and growth? Not if politicians forget about the market failures that prompted regulation in the first place. Privatisation of pensions as a way to unleash productive forces? Preposterous, because state systems have much lower administrative, marketing and accounting transaction costs.
Stiglitz makes a logical argument in a language that is clear and precise. His book would be even more convincing had he had the courage to come up with illustrative examples and more evidence for his assertions. Despite this reservation, “The Roaring Nineties” is well worth reading. It seeks to explore the core – if such a thing exists – of established economic doctrine.
Carel Mohn
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