Wealth and Want
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Market Fundamentalism


Joseph Stiglitz: October, 2002, interview

Q: You criticized "The Washington Consensus." From reading your book, I see that you summarize that set of doctrines as "1) Fiscal Austerity, 2) Privatization, and 3) Market Liberalization." What are, in your view, the central weaknesses of the policies that flow from the Consensus?

JES: It didn't work. I mean, the weaknesses are not that these are necessarily bad in their own right, but it's the balance. Fiscal prudence is a good thing. But they pushed it beyond where it ought to have been. Market Liberalization is a good thing, but not if it's done too fast.

Q: Would you say, then, that there is a structural flaw in the market system?

JES: There are many limitations. We all know that there are lots of examples where markets fail, and you need a role for government. So where the structural problem is, it's their belief that there's not a role for government to play. And that markets can solve every problem. That's the structural failure: "Markets are perfect, and can solve every problem."

Q: For this interview, I also read George Soros' book, On Globalization, which I know you reviewed in the New York Review of Books. In it he states, "It is market fundamentalism, which holds that the social good is best served by allowing people to pursue their self-interest without any thought for the social good — the two being identical — that is a perversion of human nature" (p.179).

JES: Yes, George and I are very similar in our views.

Q: Don't you think we need to go deeper and look at the rules that govern the unequal bargaining power between the rich and the poor? Isn't that what really has to be attacked?

JES: Yes, that's what I'm saying in the book. The underlying problem is the way the rules are made. If the rules are bad, you need to ask the question, "how did those rules get established?" And it's the processes by which the rules get made that is the underlying source of the problem. ... read the entire interview



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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper