People, Power and Profits
Progressive Capitalism for An Age of Discontent
Joseph E Stiglitz
Allen Lane, £20
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Since the election of Donald Trump as US president there have been many books exploring why he won – but very few of them contain any concrete suggestions for addressing the discontent that paved his way to power. Joseph E Stiglitz, who has written extensively about the problems associated with globalisation, tries to fill this gap.
Stiglitz thinks Trump took advantage of widespread anger at stagnant wages and growing inequality. Until the late 1970s, a strong state and powerful unions ensured that the gains from capitalism were shared equally, so that everyone’s living standards rose. However, a combination of deregulation, trade agreements that pushed down the wages of workers in developed countries, and the failure to plan for technological change meant that the incomes of the elite soared, leaving the low-paid and even middle- income Americans behind. America’s political system has also made things worse, giving corporations disproportionate power to influence policy.
Stiglitz is at pains to emphasise that he is neither anti-markets nor anti-trade. In his view, a key problem is that high levels of industrial concentration and overly restrictive intellectual property laws have strangled competition. This has not only allowed firms to push down wages and push up prices, but also reduced innovation.
Similarly, he thinks it’s wrong to claim that foreign trade negotiators have run rings around their American counterparts; instead, the US has focused more on making it hard to regulate multinationals, while refusing to insist that deals contain minimum labour standards.
Stiglitz’s solutions are tougher antitrust laws, a better welfare state and more investment in public infrastructure and public services. While opposing protectionism, he wants to see labour standards at the forefront of any trade deals, along with stronger multilateral institutions such as the World Trade Organisation, which he thinks is being undermined by Trump’s bluster and threats. He also wants to see reforms to America’s creaking political institutions, including measures to boost voter turnout and a clampdown on the scope for companies to contribute to election campaigns.
Stiglitz’s proposals to make capitalism work better seem reasonable – and unlike radical ideas such as a universal basic income, they at least have some chance of being implemented in the present political climate. Nor would incrememental reform of this kind undermine an economy which, for all its faults, remains one of the most dynamic in the world.