Friday, 8 June 2007


well new chapter, on to those Keynesians a bit critical of nasty old capitalism, thought that Hari's description of Stiglitz is silly but rather amusing.

[Joseph Stiglitz] looks like a caricature of a Wicked Capitalist from a Bolshevik propaganda poster circa 1917. You know: the one where a pig-like businessman rests his feet on a perspiring, emaciated worker and spoons caviar into his fleshy gob. Stiglitz is round and portly, with braces to hold up his trousers. He has a big grin, worn on a mouth that looks like it was born to hold a fat cigar. Yet he is one of the most important left-wing economic and political thinkers of our time, and his agenda cuts to the heart of the most urgent moral issue in the world: mass poverty. (Johann Hari, Independent on Sunday, 9 November 2003)

Though these banner-wavers hog the headlines and disrupt the streets, they pose no serious threat to the two Bretton Woods institutions [the IMF and the World Bank] Their goals (such as ‘end capitalism’) are too absurd; their arguments too incoherent. But this year, more than most, the IMF faces criticism from a more serious source – those inside rather than outside the barricades. A growing chorus of insiders, from staff members (sotto voce) to Wall Street bankers (more loudly), is asking whether the Fund and the rich countries that largely determine its policies know what they are doing. (Economist, 26 September 2001)

Along with the black-clad messengers and NGO activists some surprisingly sober figures have been prepared to challenge neo-liberal globalisation. The fact that bankers, economists and speculators are questioning the system that made them wealthy clearly disquiets advocates of unfettered capitalism. While some of these ‘insiders’ criticise the IMF for lack of true zealotry in the capitalist cause, many believe that the globalisation it promotes is socially and economically destructive. Joseph Stiglitz, former Chief Economist of the World Bank and George Soros, perhaps the world’s best-known financier, are the most important, other ‘establishment’ figures have echoed their assumptions that the capitalist market needs careful national and international regulation to function sustainably. The late Sir James Goldsmith, the corporate asset-stripper once condemned as personifying capitalism at its worst, attacked free trade and took on GATT, before it was fashionable to do so, during the 1990s (Goldsmith 1994). James Tobin the economist who argues that speculative flows of capital should be taxed also springs to mind. The Nobel prize winner Amartya Sen is also one of a number of economists who have echoed Stiglitz’s perspective (Sen 1999). The example of John Gray, a former Thatcherite and contributor to the free market Institute of Economic Affairs, is instructive. His detailed and passionate attack on globalisation from the right is difficult for conservatives to answer (Gray 2002). Drawing upon the Austrian social thinker Karl Polanyi, he argues that neo-liberalism leads to social chaos, smashing the bonds of family and community necessary for a stable human order.
These critics argue that US-style capitalism is far less efficient than European or Asian variants. They believe that the Washington consensus of unlimited free trade, privatisation and strong deflationary policies actually prevents capitalism from growing and developing countries from becoming financially secure. They echo the key assumption of the economist Keynes, whose policies helped rescue the post-war global economy from recession and mass unemployment, that government intervention actually makes markets work more effectively. Their critique is not dissimilar to that of Hirst and Thompson who argue from a social-democratic perspective that capitalism can (and should) be reined in by the nation state (Hirst and Thompson 1999). This chapter focuses on Stiglitz and Soros, examines their challenge to economic orthodoxy and shows how their ideas are derived from John Maynard Keynes reformist interventionist economic approach developed in the 1930s.

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