This is an article from World Review: The State of Democracy, a special section that examines global politics and events, and is published in conjunction with the annual Athens Democracy Forum.
The coronavirus pandemic has exacerbated the gap between the wealthy and the poor, questioning capitalism: that’s the conclusion of two economists Joseph Stiglitz and Hervé Berville, speaking at this year’s Athens Forum for Democracy. New York Times.
Professor Stiglitz, winner of the 2001 Nobel Memorial Prize in Economic Sciences, a former chief economist at the World Bank and a professor at Columbia University, proved in a pre-conference interview that the private sector is incapable of responding alone to global health challenges. The challenge and this government had a big role to play.
Berville, a French MP from President Emmanuel Macron’s centrist party and author of the 2018 report on reforming French aid policy, said in a separate speech that rich countries are spending billions on themselves and doing little to help countries that need it. most.
The following interviews have been edited and shortened.
Joseph Stiglitz
Professor Stiglitz, do you think the pandemic will pave the way for a more socially conscious capitalism?
Yes, a lot and for several reasons. As in the 2008 financial crisis, we saw that the markets were not as “good” as we thought. They were not durable. They couldn’t make face masks, protective gear, complex products like that. We had cuts on the supply side.
The image that markets can solve all problems has really been shaken. At this time of crisis, we recognize that we are turning to government to help us face macroeconomic and vulnerabilities, while also protecting us in terms of public health. And we will not go back to the private sector when we experience a pandemic again. What we really need is a stronger public sector.
How has capitalism been questioned as a system and a way of life?
The pandemic has exposed some of the naiveties of our capitalism: inequalities. It has demonstrated the strength and weakness of the private sector in producing vaccines so quickly. They still can’t produce enough vaccines to protect the rest of the world, and another wave, potentially coming from a developing country where the disease isn’t under control, will hit us.
You state in your books and speeches that the markets do not pay attention to social justice and income distribution. Yet capitalism is built on the concept of the free market. How are we going to change jobs?
Through politics and through a change in societal norms. Let me just give a couple of examples. This kind of awareness has driven the vast majority of people at the Business Roundtable. [an association of chief executives of leading U.S. companies] supporting the transition from shareholder capitalism to stakeholder capitalism. Even if not all of them really mean it in their hearts, this shift in their vision will have implications over time.
I’ve been in meetings where the CEO of a large company said: “I hadn’t realized how poorly we paid our employees, that most of our employees were not getting a living wage. When I recognized it, I changed it.” Previously, its awareness was minimizing labor costs. And now his consciousness is much greater: What kind of enterprise do we want to have?
What measures should governments take?
The first obligation is to ensure that everyone who can find a job and who wants to have a job can find a job. This is our first failure and we need to fix it.
In the next 30 years, it will be necessary to achieve the green transition, ensure that everyone has adequate education, have a decent infrastructure, etc. We have a lot of work to do.
What about universal basic income?
Given all the other things we have to do, I think we should focus our spending, our support payments on those who can’t work and are most in need. It would be different if we had more money, but I can’t see that right now. We need many more.
Herve Berville
How has the pandemic worsened the gap between Western and emerging economies?
The judge exposed the inequalities to an absurd degree. We’ve seen countries in Europe and North America accumulate billions and billions of dollars in debt and implement massive bailouts. Yet we were not in a position to come up with solutions for emerging economies. We had to impose a moratorium on their debt, and when they were the ones most in need of help, they had no access to financial markets.
While only 2 percent of the population of these countries are vaccinated, we are at 80 percent vaccination rates in European countries and we are talking about making a third dose of vaccine.
Today, the capitalist system does not correct imbalances, it reinforces them.
To be fair, globalization and free markets have allowed world poverty to be reduced to never-before-seen levels.
It is true that millions, if not billions, of people have been lifted out of poverty. The question now is how to reduce or even eliminate the remaining pockets of poverty. At a time when billionaires are reaching unprecedented levels of wealth, it is unacceptable that there are still people without access to food and basic health care.
It is not enough to provide goods and services to these countries. They also need to be made accessible. Even if a health center does not charge more than 1 euro, if people cannot go to that health center, there is inequality in access. We need to work on infrastructure, social and geographic mobility.
How has capitalism contributed to the deep inequalities between the West and the rest of the world?
There is a massive setback in governments and public services, and a push for minimal taxation: a race to the bottom. Nations were viewed as more economically virtuous and could attract multinational companies and foreign investment if they imposed lower taxation. We now understand that this is a political and economic mistake and that its victims are the poorest peoples.
Not enough investment in human capital. We also paid little attention to the consequences of what we did to natural capital. We assumed that the allocation of financial capital would increase a country’s human and natural capital. So there has been chronically underinvestment in education, training, health and biodiversity conservation – on behalf of governments as well as international institutions.
The mistake in economic development strategies was to assume that one size fits all: the same formula would work in completely different countries.
We cannot respond to common global challenges—education, health, terrorism—without joint action involving all countries in the world. We cannot solve problems such as poverty and inequality alone in our little corner. Just as there cannot be socialism in one country, there cannot be reformed capitalism in one country.
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