Joseph E. Stiglitz Quotes

The answer that socialism provided to the age-old question of the proper balance between the public and the private can now, from our current historical perspective, be seen to have been wrong. But if it was based on wrong, or at least incomplete, economic theories, theories that are quickly passing into history, it was also based on ideals and values many of which are eternal. It represented a quest for a more humane and a more egalitarian society.

Innovation is important; it has transformed the lives of everyone in the world. And intellectual property laws can and should play a role in stimulating innovation. However, the contention that stronger intellectual property rights always boost economic performance is not in general correct. It is an example of how special interests—those who benefit from stronger intellectual property rights—use simplistic ideology to advance their causes.

The standard neoclassical model the formal articulation of Adam Smith's invisible hand, the contention that market economies will ensure economic efficiency provides little guidance for the choice of economic systems, since once information imperfections (and the fact that markets are incomplete) are brought into the analysis, as surely they must be, there is no presumption that markets are efficient.

The IMF has been encouraging, sometimes even forcing (as condition of assistance), countries to have their central banks focus only on inflation. Europe succumbed to these doctrines. Today, throughout Euroland, there is unhappiness as the European Central Bank pursues a monetary policy that, while it may do wonders for bond markets by keeping inflation low and bond prices high, has left Europe's growth and employment in shambles.

The central economic issues go beyond the traditional three questions posed at the beginning of every introductory text: What is to be produced? How is it to be produced? And for whom is it to be produced? Among the broader set of questions are: How should these resource allocation decisions be made? Who should make these decisions? How can those who are responsible for making these decisions be induced to make the right decisions? How are they to know what and how much information to acquire before making the decisions? How can the separate decisions of the millions of actors decision makers in the economy be coordinated?

The notion that every well educated person would have a mastery of at least the basic elements of the humanities, sciences, and social sciences is a far cry from the specialized education that most students today receive, particularly in the research universities.

Economists often like startling theorems, results which seem to run counter to conventional wisdom.

Instead, unchecked by competition [by the USSR] to "win the heart and minds" of those in the Third World, the advanced industrial countries actually created a global trade regime that helped their special corporate and financial interests, and hurt the poorest countries of the world.

The job of the Western trade negotiators is to get a better trade deal for their country's interests—for example, gaining more market access and stronger intellectual property rights—without giving up agriculture subsidies or nontariff trade barriers. Fairness is not in the lexicon of these trade negotiators.

And it should be clear that, in spite of the increases in GDP, in spite of the 2008 crisis being well behind us, everything is not fine. We see this in the political discontent rippling through so many advanced countries; we see it in the widespread support of demagogues, whose successes depend on exploiting economic discontent; and we see it in the environment around us, where fires rage and floods and droughts occur at ever-increasing intervals.

The neoclassical paradigm, through its incorrect characterization of the market economies and the central problems of resource allocation, provides a false sense of belief in the ability of market socialism to solve those resource allocation problems. To put it another way, if the neoclassical paradigm had provided a good description of the resource allocation problem and the market mechanism, then market socialism might well have been a success. The very criticisms of market socialism are themselves, to a large extent, criticisms of the neoclassical paradigm.

I, like many members of my generation, was concerned with segregation and the repeated violation of civil rights. We were impatient with those (like President Kennedy) who took a cautious approach. How could we continue to countenance these injustices that had gone on so long? (The fact that so many people in the establishment seemed to do so — as they had accepted colonialism, slavery, and other forms of oppression — left a life-long mark. It reinforced a distrust of authority which I had had from childhood).

The era of multilateral trade liberalization seems to be nearing an end (at least for a while), as well-founded disillusionment in the developing countries combines with growing protectionist sentiment in the developed world.

Privatization is, at best, only a partial solution. Privatizations in which vouchers are given, and there is not a recapitalization, do not address this problem at all. Privatizations in which the firm is sold are likely, in the presence of limited competition for the firm, to provide an underestimate of the true value of the firm's assets. Accordingly good performance, based on this undervaluation of the firm's assets, does not provide a true measure of the firm's efficiency.

By changing the locus of caring and responsibility from the individual to the government not only for the needy, but for oneself, one's parents, one's children we change society and we change ourselves. Here again we see a certain irony: Attempts to improve society by having the government undertake a greater role in redistribution, may ultimately through their effects on individuals and the nature of the social contract have more ambiguous consequences.