• Joseph Stiglitz
• Allen Lane
• RRP $39.00
Joseph Stiglitz is slightly rumpled, friendly and thoughtful man. But he is not happy with the state of the world. And, given his grasp of just how precarious things are, his unease is entirely understandable.
Life is seldom simple for the bearers of bad tidings and Stiglitz is, and has been for some time, just that. He is one of the wisest economic thinkers of our time. To prove it, he is Nobel Prize winner, acknowledged for his explanation of how markets do not work as well as the literature, particularly of the Chicago School of free-market economics kind, suggests.
For while he had the ear of President Bill Clinton as one of his economic advisors. But he was ousted as the World Bank’s chief economist when he disagreed with the way in which the bank and the IMF treated Asian economies that stumbled in the late 1990s. And, much to his chagrin and frustration, he’s made little progress convincing the Obama administration that it should listen more carefully to him.
But none of this can take away from the essential truth and comprehension of this awful but revealing story. Stiglitz consistently warned those willing to listen that the financial crisis that tipped the world into economic meltdown would happen. They didn’t, and now Freefall: free markets and the sinking of the global economy explains exactly why his predictions came true and how, despite the hundreds of billions of dollars pumped into the American banking system, the world economy, and America’s in particular, it’s just as fragile as it ever was.
Stiglitz is, despite the events of the past 30 years, still optimistic that the world will not “need another crisis to finally motivate the political process” to start thinking about “developing truly efficient financial system” which, in his opinion, is what is needed to “direct capital to where it is needed and where it is most productive”.
The world cannot, and should not return to the pre-crash financial order where greed and mistrust prevailed and accelerating inequality set the world on course toward conflict of every imaginable kind. How could something – banking and finance – that “was means to an end become the centre of new economy”, he asks.
Stiglitz’ explanation of the economic and market forces that now prevail is convincing, coherent and, humane.
He provides focus and format for considering new capitalist order, but just as compelling is his explanation of the moral crisis that underpins contemporary political and business thinking. “Much has been written about the foolishness of the risks that the financial sector undertook, the devastation that the financial institutions have brought to the economy, and the fiscal deficits that have resulted; too little has been written about the underlying ‘moral deficit’ that has been exposed – deficit that may be larger and even harder to correct,” he writes.
Every leader and senior manager with responsibility to understand the fundamentals facing the world economic, political, environmental and social order should consider this book priority. It is must read.
