Progressive capitalism? Is that even possible!?

29 Apr, 2019 at 09:16 | Posted in Economics | 5 Comments

 

5 Comments

  1. The interviewers see that society should be embedded in the economy. Stiglitz seems to be saying that the economy should serve the people and public interest. He was right on talking about values being more important than details.

  2. Talking in vague rhetorical generalities — values instead of details — enables Stiglitz to play a blocking role with regard to progressive politics. In this interview, with regard to health care reform in the U.S., he does not do his moral duty as a professional economist and suggest that for-profit health insurance is an unworkable mechanism design. For-profit health insurance is never going to work properly; the incentives for the insurer to deny care are too strong. The economics of this are crystal clear. But, he conspicuously does not say as much when he has the chance. Instead, he talks up “the public option”, a vaporous political gambit that has been used repeatedly to frustrate genuine reform efforts.

  3. The world today is in the grip of a devastating and protracted economic and financial crisis. What began with the collapse of Lehman Brothers in September 2008 has turned into a global catastrophe, shaking the very foundations of the capitalist system. The dominant paradigm of mainstream economics is also being increasingly challenged. If the fall of the Berlin Wall in November 1989 signalled the end of the seventy years’ experiment with communism, the crisis that has engulfed the capitalist world has the potential to become an existential threat to capitalism, or at least to its present version of ‘Market Fundamentalism’, which represents the high watermark of a politico-economic experiment that has endured for over three centuries – a system whose advocates had begun to glibly claim it as ‘the final destiny of mankind’.1 Much seems to have been washed away by the powerful currents of this financial tsunami. (Mawdudi, Sayyid Abul A’la. First Principles of Islamic Economics (Kindle Locations 259-266). Kube Publishing Ltd. Kindle Edition.)
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    From the events of 2007/9, it seems plain that the financial markets have not worked to promote the common weal, and they have caused, rather than absorbed, chaos and instability. […] If the system can produce such wealth-destroying success for some, how can it work for our overall benefit? And if the financial markets are like this, then what about the rest of the market system? (Bootle, Roger, The Trouble with Markets: Saving Capitalism from Itself, London/Boston: Nicholas Berkley Publishing, 2009, p.3.)
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    While trillions of dollars are being doled out to bailout banks, investment houses, and insurance tycoons, there is little concern for the households that are at the suffering end of this sordid mortgage scandal. The worst part of this obnoxious tale is that the victims, who had no role in driving the world into this crisis, have become the worst sufferers.
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    Noble Laureate Joseph Stieglitz laments the callous contrast one finds in the U.S. policy to provide massive $700 billion to bailout the banks while ‘ignoring the millions of homes going into foreclosure’. The U.N. Secretary-General Ban Ki-Moon brings into sharp focus this catastrophic aspect of the crisis, which he rightly describes as a ‘moral problem’. He says:
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    The ranks of the global unemployed have grown by 34 million, and another 215 million women and men have become working poor. And, for the first time in history, more than one billion people are going hungry worldwide. The moral argument is clear. After all, those least responsible for the global economic meltdown have paid the highest price – in lost jobs, higher costs of living, growing community tensions as families struggle to make ends meet. (Mawdudi, Sayyid Abul A’la. First Principles of Islamic Economics (Kindle Locations 288-298). Kube Publishing Ltd. Kindle Edition.)
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    Roger Bootle sums up this predicament of mankind in the following words:
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    How did we reach the current ghastly position? My answer to this question is a tale of greed, illusion, and self-delusion on a massive scale. It not only reveals the truth about markets and economies, but also shines a torch on the nature of society – and on human nature itself.
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    However dark, dismal and devastating the costs and consequences are of this global crisis, there is a silver lining on the horizon in the form of serious efforts on the part of an increasing number of intellectuals to revisit the foundations on which the contemporary economic system is built. This crisis has exposed its feet of clay. It does not merely reveal a crisis of the financial system. In fact it has revealed many other dimensions in the forms of a crisis of economy, a crisis of economics, a crisis of society and ultimately a crisis of civilization. These crises have become a wake-up call for a number of economists and social thinkers to revisit the fundamentals of their disciplines, to get out of the safe cocoons into which many specialists have retreated, and to explore the root causes of the malaise that afflicts the world economy. It has also prompted people to search for alternatives – some seeking ways out within the dominant paradigm of economic thought and economy, and others endeavouring to search for a new paradigm – not a mere shift within the paradigm but a shift of the paradigm. Humanity today stands at a new threshold, seeking fresh avenues to move towards a new world order.
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    (Mawdudi, Sayyid Abul A’la. First Principles of Islamic Economics (Kindle Locations 259-310). Kube Publishing Ltd. Kindle Edition.)
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    1. Fukuyama, Francis, The End of History and the Last Man (London: Hamilton, 1992).

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    The question in the title of this post, in my view, doesn’t go deep enough. I don’t believe the GFC that has set the field of economics on its head is merely a crisis of capitalism; rather, it is deeper, it is ultimately a crisis of civilization. And as long as intellectuals limit the discussion to economics alone without including a deeper analysis that includes philosophy and religion, I doubt the root causes and real solutions will ever be forthcoming.

  4. What is needed is a more integrated and holistic approach to all our problems, keeping in view the moral, social, cultural, spiritual, political, economic and cultural needs and aspirations of mankind. The shift of emphasis from machine to mind, from money to man, from means to ends, represents a qualitative shift in the global human situation.

    Mawdudi, Sayyid Abul A’la. First Principles of Islamic Economics (Kindle Locations 377-379). Kube Publishing Ltd. Kindle Edition.

  5. The current financial and economic crisis has opened up new vistas for human reflection, dialogue and discourse, research and experimentation, and transformation and reconstruction of a better world. We have wasted too much breath on ‘clash of civilizations’. It is time, instead, to give some serious thought to the crisis of civilization that has become the predicament of man in the contemporary world. It is a challenge that humans face in all parts of the world. It is time to look into all the resources that are available to mankind in its search for a brighter future. (Mawdudi, Sayyid Abul A’la. First Principles of Islamic Economics (Kindle Locations 392-396). Kube Publishing Ltd. Kindle Edition.)


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