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Economics and its discontents

Joseph Stiglitz has been on a journey—both personal, and political
Tom Clark is Editor of Prospect

Joseph Stiglitz has written a new book about the euro. At least that is what it says on the cover. But when I put it to the softly-spoken professor, who gives every impression of choosing his words with painful care, that the book is not really about the euro at all, he is only too happy to agree.

Your real target, I rather presumptiously suggest to the Nobel laureate and former World Bank Chief Economist, is not really the structural flaws of the single currency. No, your real game here—I press on—is an all-out assault on the “Margaret Thatcher/Ronald Reagan ideology which happened to have been in fashion when the euro was created.” To my relief, Stiglitz doesn’t take umbrage, but smiles, nods, and finally says “that’s right.”

In the amicable hour to come, I will hear this once überrespectable figure rail against the corporate “capture” of public institutions, hail the “progressive” credentials of Jeremy Corbyn, and explain that when it comes to the next spin of globalisation, a process which he once championed, that you might very well judge that “you don’t want to do it.”

Stiglitz first came to prominence in the field of information economics—if that is not a contradiction in terms. For decades, he was a world champion in this decidedly minority sport, picking up prestigious medals for scholarship as long ago as the 1970s, but he ploughed away in seclusion of the academy until Bill Clinton came knocking, and in 1993 enlisted the economist as a guru of the “Third Way,” the intellectual rationalisation of Clinton’s middle-of-the-road electoral strategy.

It was the start of a personal journey, which has taken Stiglitz from a life of academic obscurity, and transformed him into a familiar pundit and occasional power player. But it set him off, too, on a political journey, which reveals much about the shifting tides within economics and the polarisation of American politics.

A couple of decades ago, Stiglitz might have been described as a mainstream technocrat, albeit one more concerned with the poor than most. Indeed, his British collaborator Tony Atkinson says the pair of them used to joke that he was the “right-wing half of our partnership.”

By 2011, however, he was penning the Vanity Fair polemic on America’s “1 per cent problem” which has a good claim to be the intellectual spark that lit the fire of the Occupy Wall Street movement. And in 2016, it is soon clear to me, he is an ideological battler who, though he wages his war more meticulously than most, is nonetheless unrelenting about it. His worries about globalisation are no longer specialist quibbbles about how, say, the integration of financial markets is working out. He is impatient with the international order as a whole, which he regards as short-changing not only poor peasant farmers, but also the toiling classes of the United States and Britain. And, as I’m about to disccover, he relieves his frustration by taking aim against the great shibboleths of orthodox economic faith—including open-door immigration and free trade.

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About Prospect Magazine

In Prospect’s October issue: Nobel-winning economist Joseph Stiglitz tells our new Editor Tom Clark why globalisation has made him more radical. Rachel Holmes asks whether more women leaders really help women. Five hundred years on, what does Thomas More’s “Utopia” tells us about political idealism. And Tristram Hunt on why Labour needs another Clement Attlee. Also in this issue: David Runciman on why more members isn’t always a good thing for a political party. Will Self on why we’re all turning into robots. Your handy graphic guide to Brexit. Plus: David Willetts on what Theresa May’s industrial strategy should look like. And Kenneth S Rogoff argues we should abolish cash.