Nobel Prize-winning economist Joseph Stiglitz joins Nick and Goldy to talk about his new book, “The Road to Freedom: Economics and the Good Society.” Stiglitz challenges the orthodox economic theories that have shaped our understanding of capitalism and argues for a new approach called progressive capitalism. Stiglitz also discusses the flaws of neoliberalism, popular misconceptions about freedom, and the widespread benefits of addressing issues like climate change and inequality. He shares insights on the need for a broader set of economic policies that prioritize the well-being of all people, not just the wealthy. Their discussion sheds light on the evolving landscape of economic thought and the hope for a more equitable and sustainable future.
Joseph Stiglitz is a Nobel Prize-winning economist and the best-selling author of multiple books on economics. He was also chairman of the Council of Economic Advisers under President Clinton and chief economist of the World Bank. He now teaches at Columbia University and is chief economist of the Roosevelt Institute. His latest book, The Road to Freedom: Economics and the Good Society, delves into the failures of the neoliberal economic model and presents a comprehensive critique of how “free” markets have led to various crises, including financial instability, inequality, and social unrest.
Twitter: @JosephEStiglitz
Further reading:
The Road to Freedom: Economics and the Good Society
More from Joseph Stiglitz:
People, Power, and Profits: Progressive Capitalism for an Age of Discontent
For Good Measure: An Agenda for Moving Beyond GDP
Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump
Website: https://pitchforkeconomics.com
Twitter: @PitchforkEcon
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Nick’s twitter: @NickHanauer
Nick Hanauer:
The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.
President Joe Biden:
It’s time to build our economy from the bottom up and from the middle out. Not the top down.
Nick Hanauer:
Middle out economics is the answer.
President Joe Biden:
Because Wall Street didn’t build this country. Great middle class built this country.
Nick Hanauer:
The more the middle class thrives, the better the economy is for everyone, even rich people like me.
Speaker 3:
This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.
Nick Hanauer:
Well, Goldy, today echoing something you’ve said 1,000 times, part of the great part about this job is getting to talk to the coolest, most interesting and most consequential people in the world, and today is definitely one of those days.
Goldy:
Yeah. Best book club ever.
Nick Hanauer:
Ever. Because today we get to talk to our old friend, Joseph Stiglitz, the Nobel Prize winning economist about his new book, The Road to Freedom: Economics and the Good Society. And like everything he writes, it’s a really interesting and very very well written. It’s also very well-read, very well written book. What’s interesting about the book is that it plays on Hayek’s Road to Serfdom, which was an argument about basically that if government constrained capitalists, I mean, the short form of that book is that if government in any way constrained capitalists, that we would all eventually become serfs.
Goldy:
Totalitarian, it leads to totalitarianism. Yeah. He feared that like a government that actually went out of its way to regulate the marketing for the good of its people would lead to fascism or communism inevitably.
Nick Hanauer:
In fairness to Hayek, real old-fashioned terrible communism was in ascendance in 1944, right when he wrote the book.
Goldy:
And we’re still fighting the Second World War, we had the rise of fascism in Germany and Stalinism in the Soviet Union. And so he’s clearly reacting to what was then a very real and present threat.
Nick Hanauer:
Yeah, a legit threat. So he was not imagining that something bad could happen. For sure, there was some bad shit happening in the world, and he reasoned from that in a very particular way. But I think it’s safe to say that he was completely wrong and his accomplice, Milton Friedman took these arguments even further and popularized them into what we now call neoliberalism. And that ideology really … I think it’s best understood as a theology is, as we’ve argued many times kind of the core of what has pushed the world away from a better and more ideal way to manage our affairs. The book is really interesting, and he goes after Goldy, like all these … What are they? The crown jewels of neoclassical economics.
Goldy:
Yeah. Just point by point, especially in the first third of the book and throughout it just point by point, going through all of the core assumptions of orthodox economics that you’re taught in your econ 101, your introductory textbook, and just explaining that it’s just flat out wrong. That these theories work in paper, but not in the real world because they’re based on a set of very constrained and unrealistic assumptions that are necessary to make the math work.
Nick Hanauer:
Anyway, really cool book. And I think it was really cool that it started with freedom and really, really trying to dissect what that word means and in particular, pointing out the really impoverished way in which Americans generally, and certainly the right thinks about and defines freedom. And from there goes into one of our favorite topics, efficiency, which is a pile of bologna generally. Yeah, just a fascinating book, but enough of you and me. Let’s talk to Joe.
Joseph Stiglitz:
I’m Joseph Stiglitz. I’m a professor of economics at Columbia University. I’ve just written a book called The Road to Freedom: Economics and the Good Society, and the title of the book really says a lot about what the book is about. It attempts to rethink what we mean by freedom and what kind of an economic system is most likely to deliver the most freedom for the most individuals. And an important thesis of the book is that the way freedom has often been thought of, particularly by those in the right, has really not understood deeply what freedom means because while the freedom of some may be enhanced, the policies that they advocate reduce the freedom of others.
Nick Hanauer:
Right. It’s a very unusual book about economics in the sense that it’s anchored around these competing notions of freedom. And we presume you’re playing off Hayek’s Road to Serfdom.
Joseph Stiglitz:
That’s right. Hayek, yeah. A great economist of the middle of the last century wrote a book called The Road to Serfdom in a period where he saw Keynesian economics arguing that government needs to take a larger role to stabilize the economy. It was written in the aftermath of the Great Depression saying government ought to do something about those kinds of economic downturns. And it was written in the aftermath of the growth of the welfare state with social security and healthcare in some countries. And Hayek argued that those kinds of roles of government to protect individuals and manage our society better, were putting our society on the road to serfdom. And one of the things that I try to argue is that he got it 180 degrees wrong. That what we see today is the countries that face resurgence of authoritarian populism, are countries not where government has done too much, but where government has done too little.
Nick Hanauer:
And then Milton Friedman came along and weaponized a lot of those ideas and pushed them, I think. I mean, at least to my eye even further in Free to Choose.
Joseph Stiglitz:
That’s right.
Nick Hanauer:
And for our listeners, Joe, just expand a little bit on how freedom has become so confused and conflated in our society.
Joseph Stiglitz:
Well, there’s two aspects maybe that I could help clarify. The first is a recognition that in our closely integrated society, modern society, what one person does can have very big effects on others. We don’t live in isolated farms. We live more and more in congested urban areas. And in that context, what one person does can have a very big effect on others from a simple thing of if you smoke, you can get cancer from the secondary smoke. But maybe more relevant, the more people carry guns, the more likely you’re going to be killed by somebody shooting you.
Nick Hanauer:
Yes.
Joseph Stiglitz:
And if one walks around with a contagious disease, without masks, without social distancing, somebody else may lose the right to live. So your right to go around without a mask, without a vaccine impinges on somebody else’s right to live. And that’s the reality of modern life. I give a quotation from a famous Oxford philosopher, Isaiah Berlin, where he said, “Freedom for the wolves has meant death for the sheep.” So we have to understand that there are trade-offs and that we have to evaluate them. And one of Milton Friedman’s famous books that you mentioned Free to Choose was also … I call it Free to Exploit. If free enterprise, his view was let them do whatever they wanted, [Latin 00:09:37] the buyer beware. But that means people can take advantage of market power, consumer ignorance, disadvantaged people, and exploit them in any way they want. And that doesn’t create a good society, at least in my view.
Goldy:
So you’re suggesting that the freedom of billionaires like Nick might come at the expense of people like me?
Joseph Stiglitz:
Exactly. And that has large consequences for our society. The way I approach this, partly as an economist is to say that what you mean by freedom in some sense is the scope of what you can do, what you can choose. And if you get a disease that forces you to go to the hospital, you’ve lost your freedom to choose. And more to the point, we can expand somebody’s freedom by giving him more education, better health. And so one has to recognize that somebody who is at the verge of starvation really doesn’t have much freedom. He does what he has to do to survive, and we can expand his freedom by giving him more resources. And again, there’s a trade-off. To give him more resources, we may have to tax somebody, and we have to make a judgment about the narrowing of the scope of choice of others as a result of the taxes with the benefits that we give to expanding the choices that are available to the recipient. And in some cases, our society is pretty clear about how they make those trade-offs. In other cases, it may be more difficult.
Nick Hanauer:
But the really interesting parlor trick that Milton Friedman pulled was that he wasn’t making a philosophical argument about the kind of society he thought we should all prefer. He was making an economic argument that if you let people be free in the way that he described, that that would lead to better economic outcomes for everybody. That was the trick.
Joseph Stiglitz:
That was what he tried to advocate.
Nick Hanauer:
More efficiency, whatever efficiency means.
Joseph Stiglitz:
That’s right. That was part of his argument. And in that aspect, economists have looked at that. Part of my homework that led to the Nobel Prize was to look at that question more precisely than he ever even tried and showed that that was wrong, that whenever you have imperfect information or incomplete markets, imperfect competition, externalities just isn’t right, isn’t true that just letting [inaudible 00:12:45]. Or as Adam Smith might’ve put it, “The pursuit of self-interest leads as if by an invisible hand to the wellbeing of society.” That just isn’t right. And Milton Friedman took it to an extreme where he said, “Firms should maximize their value no matter what.” And if you can increase your market value by exploiting others, so long as it’s within the law, you are obligated to do it.
Nick Hanauer:
Yes. It’s your moral obligation. Right. So in the book, you reference an anecdote that you actually confronted Friedman with a bunch of papers that you had done pushing back on some of this nonsense. You are the only person we have ever talked to who’s done anything like that. Please tell us more.
Joseph Stiglitz:
It was after a seminar I gave at the University of Chicago, in which I thought I had proved that firms maximizing their value did not lead to societal wellbeing. It was a very simple, I thought, elegant model. The interesting thing, it’s been now 50 years, was exactly 50 years ago that I actually went on to publish that paper, and no one’s refuted it in that half century, but it was very counter to what his beliefs were. And he said, “Joe, you’re wrong. Markets are efficient.” And I said, “Well, tell me which of my assumptions were wrong that you disagree with, or tell me where in my analysis, my calculations, my mathematics, I made a mistake.” He said, “Joe, you’re wrong.”
So we went in that circle for a while and it was very clear he wasn’t going to actually look at the details of the model, and he held to his beliefs. It convinced me at the time that these were essentially religious beliefs, not scientific beliefs, that they were very important to him. He went on, I think you see it in his book, to believe that his kind view about economic freedom, unbridled rapaciousness of markets, the kind of thing we saw in that led the banks to bring us to the 2008 Financial Crisis. He thought that was not only good for the economy where he was obviously wrong, but actually would lead to political freedom, particularly after he was so willing to engage with Pinochet, one of the worst dictators killing tens to thousands of people in Chile. I wasn’t quite sure that he was that committed to political freedom. But what we’ve seen, I argue in my book, is that again, like Hayek, he was 180 degrees wrong. This kind of unbridled, unfettered, neoliberal economics as it’s sometimes called, actually leads to this authoritarian populism that undermines democracy.
Goldy:
So what I found really fascinating in the book was you don’t just go after neoliberal economics. You go after neoclassical orthodoxy on point after point. For example, you outright say that markets are never efficient.
Joseph Stiglitz:
That’s right.
Goldy:
Yeah. If you could just go through and just basically outline where the orthodoxy, the main areas where the orthodoxy is clearly wrong.
Joseph Stiglitz:
The main thing that the orthodoxy he assumed was markets were perfect, perfect competition, perfect information, perfect risk markets, no cost of moving resources from one place to the other. Each of these assumptions are wrong. And a major thrust of my research agenda has been to show that these are really critical assumptions to the conclusion of orthodox economics that markets are efficient. And just to give you a couple of examples, when there’s imperfect information, firms can exploit the uninformed and effectively extort profits out of them. And as another example that we’ve seen very clearly in the United States, parts of the country that have been de-industrialized, the standard neoclassical model says, “Well, people just move from those de-industrialized areas to there’s growth and wages everywhere in the country should be the same.” Well, you look at the data, it’s clear that there are impediments to mobility and that has real consequences. It has real economic consequences. And now we’ve seen it has real political consequences.
Nick Hanauer:
So let’s go back to efficiency for a minute, because in economics generally, but in particular at the intersection of policymaking and economics, this word is used like a cudgel to defend the worst behavior, and it’s used in this really sloppy, ill-defined way, I find. I don’t even think the word … I mean, I’m going to go farther than you would go. I don’t even think the word has relevance in the lexicon of economics. I just don’t think it makes sense. It’s sufficient for what? For whom? How?
Joseph Stiglitz:
Yeah. Let me give you a good example of what I think you’re trying to get at. A lot of people before the Financial Crisis of 2008 saw that there was a bubble growing, that house prices were rising faster than incomes, that it was going to be very difficult for people to make the mortgage payments that they were signing onto, that there was a risk of a financial crisis, that we were building shoddy homes in the middle of the Nevada desert and charging people high prices for it. And when one of the members of the Federal Reserve Board said, “We ought to be looking at this, this is a real threat to our financial system.” Alan Greenspan and the other free marketeers responded, “That would be interfering with free markets.” And free markets,” they said, “We know are efficient.”
Well, people like me said, “This is nuts,” To put it in a technical term. “Just open your eyes, this can’t be efficient.” And not surprisingly, we were right. It turned out that there was a lot of bad behavior fraud, but there was just a lot of bad judgment as well. And the taxpayer wound up picking up a big tab, a $700 billion bailout, plus the hidden bailout of the Federal Reserve, and the consequences of people losing their jobs and their homes all over the country, in fact over the world, were enormous, and we should have done something about it. But the people committed to the ideology of free marketeers said, “No, no, no, no, don’t interfere with the free market.” In fact, Alan Greenspan was quoted as saying something to the effect that, “It’s better to clean up the mess afterwards because that won’t be as difficult as interfering with the wonders of the free market.”
Goldy:
To be fair, I mean, markets are always efficient at one thing, and that is compounding the wealth and power of the wealthy and powerful.
Nick Hanauer:
Yes. Well, I mean, at the end of the day, this word efficiency really is just a euphemism for ensuring that capital is unfettered and provides a maximum return. If the word has any meaning at all in economics, it has something to do with that. Is it capitalists will get great returns?
Joseph Stiglitz:
That’s right. And if we channel it correctly, that search for returns will be beneficial to society. But if we don’t channel it, it will work on exploitation, an aggrandizement of market power, like we’ve seen in Amazon and Google, Facebook doing things in their case, engagement by [inaudible 00:22:09] maximizes their profits no matter what it does to our young people, what it does to our society. So oil companies polluting our environment and risk of climate change increasing, that increases their profits. Now, if we channel it and say, “Look, you can’t do those things,” those companies might become energy companies focused on how to produce energy at the lowest price with the renewable energy. But if you don’t put the regulations, the cheapest thing is to pollute at the expense of the rest of us. So the power of the market is strong, but if it isn’t directed in the right direction, it’s the power to exploit.
Nick Hanauer:
So can I ask a sociological question? I mean, I don’t think it’s going to make you feel bad if I say you have been at this for a very long time.
Joseph Stiglitz:
Yes. Wisdom comes with age.
Nick Hanauer:
Exactly. You have wisdom. So the sociological question is, how did these guys win? So Joe, I have not read the paper you published 50 years ago, but after this podcast, I’m going to go find it, dig it out and read it. But how did that view not prevail? How did we get so off track?
Joseph Stiglitz:
Yeah, that’s a very good question.
Nick Hanauer:
How did that happen?
Joseph Stiglitz:
I think there were two forces at play. One is that those who benefited from Friedman’s ideas obviously embraced it. They had a lot of money, and particularly they control a lot of the media, and they even have a lot of influence in our universities by giving contributions to research that supports their perspective. So they have a disproportionate influence in the public discourse. So they had the incentives, they had the means to help shape our public understanding. So I think that’s probably the dominant reason.
The other one is that the ideas are very simple ideas until you think about them. Simple in the sense that, yeah, makes sense that firms ought to be trying to maximize profits so they can deliver the goods that we want at the cheapest price. That’s a good story until you think about it and you say, “Well, sometimes you can make more money not by delivering goods that people want, but by taking advantage of their ignorance or by ignoring the cost on society of pollution or by trying to get market power that gives you the power to raise prices.” So there are all these things that once you start thinking about what free unfettered markets might do, then you say, “Well, maybe free and unfettered markets is not really what we want. We want the power of markets, but constrained to ways that might serve our society.”
Nick Hanauer:
Yeah, absolutely. It is just fascinating. And of course, it’s also true that some of these things were plausible probably at the time.
Joseph Stiglitz:
Well, I don’t think that they were ever plausible once you started thinking about them, but I think what is true is that after all, we had had the Great Depression showing that markets sometimes didn’t work so well when one out of four people were out of a job. So that was only in 1929 and it lasted until World War II. But memories are short. Anybody thinking in 1944, which is when Hayek wrote his book, or in the 50s and 60s when Friedman was writing, if you thought back not that long earlier, you would’ve remembered the Great Depression and say, “Really, markets didn’t seem to work very well at that time.” And if you thought a little bit even further back in our history, you would’ve thought about the oil monopoly of Rockefeller. You would’ve thought of the tobacco monopoly. In the 50s, we began to see how tobacco was not only a monopoly, but was developing addictive products that were causing cancer. We began to realize the dangers, health dangers of the cigarette industry.
So we were beginning even at that point to understand the downsides of capitalism. But there’s often an oscillation in views. We’ve gone through an era like the Great Depression followed by maybe we ought to regulate markets. And then people said, “Well, maybe we’ve carried it too far. After all, we haven’t had a financial crisis. Maybe markets can take care of it.” The reason we didn’t have a financial crisis is because we had regulation. The minute they took away the regulations, we started having one after another financial crisis.
Nick Hanauer:
Absolutely. It’s so interesting. So let’s turn to the solution, if we could. Given what we know now, how do we fix this mess?
Joseph Stiglitz:
Well, I call it progressive capitalism. It’s attempts to take the power of markets, but direct it in ways that can help society. So it entails regulation, public investment, government has to have progressive taxation to finance all of this and to create a more equal and more just society. I call for a richer set of, I call it ecology of institutional arrangements, emphasizing it’s not just for-profit and government. We have civil society, we have NGOs. I teach at Columbia. It’s not a profit, for-profit, it’s not government. We get support from government, but our universities are one of the strengths of America, and none of them are for-profit. Some of them are governmental like University of California, Berkeley, but many of them are institutions like Columbia, Harvard, Princeton, Yale. So we have important cooperatives. The only part of our financial system that really worked well were our credit unions, which are a form of cooperatives.
So what I’m calling for is a rethinking of capitalism, but one which makes sure that there are in place not only checks and balances within our government, but checks and balances within our society, an array of institutions that meet a variety of needs in our society. One example is that I think that we’re increasingly becoming a care economy, taking care of the elderly, taking care of our young people, healthcare. All these are actually a very large fraction of economic activity. In that arena, for-profit doesn’t always work so well as an education. You don’t want to take advantage of older people, particularly with dementia. It’s so easy to do it. So you either want to have not-for-profits, religious groups, or government do it. It’s trying to recognize the complexity of our society and get a broader set of institutions that can deal with that complexity.
Goldy:
I’m curious about sticking with the word capitalism. When I hear the word capitalism, I think of an economy, a political economy controlled by capitalists like Nick or that [inaudible 00:31:17] capital as being the availability of capital, as being the greatest constraint on growth and prosperity. And that’s not really what you’re implying with progressive capitalism. So is it really capitalism in the sense that we’ve been led to think of the word?
Joseph Stiglitz:
And you’re right. I struggled for what name I should give to the system. And I have to admit, I may not have come up with the right word. In Europe, I often refer to it as a rejuvenated social democracy and emphasizing the word democracy and rejuvenated because certain aspects of their system haven’t worked as well as I would’ve liked. And so I’m a little bit stumped. I used the word capitalism because I wanted to emphasize that there was an important role for markets. And you’re right, the word capitalism seems to suggest that at the core, is capital. But in the last, oh, I would say 80 years, that term has been broadened to include social capital, natural capital, human capital. So I don’t feel too bad about using the word capitalism in the modern sense in which it embraces our environment, our relationships with others in our society, with the development of skills, education, ability to think. So I’m using it in a very, very broad way.
Nick Hanauer:
If you had made these arguments in 1990 or something like that, people would’ve thought you were a freak. Indeed, you probably were making these arguments in 1990.
Joseph Stiglitz:
I was.
Nick Hanauer:
Okay. Do you feel like the consensus is changing?
Joseph Stiglitz:
Yes, I do. It’s changed a lot. Not a surprise, because as I predicted back in the 1970s, the neoliberal model wasn’t going to work economically, socially, politically, environmentally, and eventually the defects would be uncovered. I worried that there would be a lot of damage done in the interim, and I worried that we were sowing the seeds for authoritarian populism. And unfortunately, in both respects, I was correct. You can see some of the change going on in the discussions over the government’s role in promoting a green transition in industrial policies. Both parties now agree on the importance of doing something to promote [inaudible 00:34:33] that the market hasn’t made our economy resilient enough.
So the failures have now been recognized on both the left and the right. So there’s a broad consensus. They may differ on what exactly is the reason for the failure. And in particular, I think a lot of people on the right are sort of in a big quandary because they continue in their belief in free markets, but they see things aren’t working very well. And so they know we need to have a CHIPS act and we just can’t have unfettered markets. So they’re rudderless. And I hope the kind of arguments I put forward in my book will lead them to rethink their foundational beliefs.
Nick Hanauer:
I’ve been at this for a while, not any fraction of the length of time that you have, but definitely even since I started, the consensus has shifted dramatically. I mean, at least it feels like to me. Joe, I hope you didn’t write anything that I didn’t see, but I’d love to tell this anecdote that when we cooked up the idea for the $15 minimum wage in 2012, not one academic economist that I know of, not one wrote in support. Everyone thought we had lost our minds. And today it’s like, “What? It’s fine. It’s not going to kill jobs.” I mean, just that transition has been something to watch. Even Larry Mishel who worked at EPI thought I had lost my mind.
Goldy:
Even Arin Dube wouldn’t-
Nick Hanauer:
Yeah.
Goldy:
I mean he-
Nick Hanauer:
Alan Krueger thought I’d lost my mind.
Joseph Stiglitz:
Let me say a little bit in defense of people like Krueger and Card, they had shown that a minimum wage at some level could increase the wellbeing of workers without costing unemployment. That was a revolution for I don’t know how long. Since the beginning of modern economics, there had been this view that having any minimum wage had to cost jobs. And the reason was in the back of everybody’s mind was a competitive, demanding supply model. You raise the wage, the demand for labor goes down and the supply of labor goes up, and there’s a gap between the two. And part of the, you might say movement of which I was a part, said that simplistic competitive supply and demand model doesn’t capture what’s going on in the world. And Card and Krueger in their work went out and tested this, and I have to give them a lot of credit for-
Nick Hanauer:
Oh, unbelievable. They were pioneers.
Joseph Stiglitz:
Pioneers, very clever testing and showed that raising the minimum wage did not cost jobs.
Nick Hanauer:
That’s right. It was.
Joseph Stiglitz:
That was a revolution in the sense that it was, of course, very consistent with what I said, not only based on economic theory, but just open your eyes and you see that labor marketing aren’t competitive. And now the thrust, you asked me before, where is the center of economics? The center of economics and labor economics is market power is so strong that maybe on average, wages are depressed by something like 30% from the competitive level. So these are not small perturbation, small all wrinkles on a basically competitive market. The fact is that these are big deals that affect how markets work.
Goldy:
And yet the bulk of the introductory economics textbooks still use the minimum wage as the illustration of the inverse relationship between price and demand.
Joseph Stiglitz:
Right. And there’s now a big gap between the standard textbook and where consensus thinking among economists is, and that’s a problem. It’s a big problem. It’s going to take time and effort to, you might say, reeducate Americans to these new ideas. On the other hand, as people just open up their eyes and see what’s going on around them, I think that more and more people are saying that competitive theory that I was taught in college really doesn’t make sense.
Nick Hanauer:
Yeah, for sure. So two more questions. So we love to ask this benevolent dictator question, Joe. So in your case, if you could do one thing, irrespective of the political constraints to straighten this out and to get us on the right path, what would you do?
Joseph Stiglitz:
I guess I would move very strongly to implement the whole set of ideas that I’ve described as progressive capitalism. I think that one needs to do the whole bundle, progressive taxation, good expenditures. If you really forced me and tide my hand and say, “No, you can’t do that whole bundle, pick one thing.” I was thinking about, what was the one thing? And I really worry about climate change. That’s an existential thing for our planet. And if we don’t get that, we’re not going to get anything right. So it’s not the center thrust of my book, but it is a central message that markets don’t solve all problems. And having a planet that we can’t live on is obviously a very big problem, to say the least.
Nick Hanauer:
Not going to be great for business.
Joseph Stiglitz:
Exactly.
Nick Hanauer:
And one final question, why do you do this work?
Joseph Stiglitz:
I guess I’d say I love my work, but I entered economics because I was concerned about issues of inequality. I had thought I was going to be a theoretical physicist. That was my aspiration. But the problems of our society just kept getting at me and I couldn’t put them aside. And so my junior year in college, at the end of my junior year, I said, that’s what I want to do with my life.
Nick Hanauer:
That’s great. In what year was that?
Joseph Stiglitz:
That was 1963.
Nick Hanauer:
Okay. Interesting.
Joseph Stiglitz:
61 years ago. And when you make a decision like that, you don’t know where it’s going to land you. And it turned out it was a good decision in terms of my having a life that I found intellectually interesting and stimulating in so many ways.
Nick Hanauer:
Yeah, and consequential.
Joseph Stiglitz:
Thank you.
Nick Hanauer:
Well, Joe, thank you so much for being with us today. It’s such honor to get to talk to you about your work and your book, and we hope you write 10 more.
Joseph Stiglitz:
Well, thank you very much.
Nick Hanauer:
So Goldy, can you imagine being right for as long as Joseph Stiglitz has been?
Goldy:
I can imagine it because I’m always right, but not as long as Joe has because 61 years ago when he made that decision to leave, not to pursue physics and to pursue economics instead, in that year 1963, I made a very important decision to be born to parents that would give me the privilege of a high quality education and the privileged start I had in the world. So he was a junior in college when I was in utero. And so no, I haven’t been doing it that long. I’ll tell you what’s really interesting to me. Speaking of long periods of time, we’ve been working together for a decade now. Can you believe that?
Nick Hanauer:
I can. Seems like 100 years.
Goldy:
Yeah. Let’s be clear. I don’t have a track record of long stints of employment. So you’ve definitely broken the record by seven years of how long I’ve managed to keep one job. But what’s interesting, when I started working with you, a very fascinating reading list that I had to start with. And when I started this work with you, it was a lot of books where there were bits and pieces, ideas that we were mining to try to build our understanding and our narrative of how the economy works. And more recently in books like this, what we see are all the bits and pieces that we’re kind of stitching together that other people are stitching together too.
Nick Hanauer:
For sure.
Goldy:
It’s no longer like, oh, there’s some physicists here and evolutionary biologists there, and complexity theorists there, and a heterodox economist there. And they all have little bits of it, but they’re all separate in their own world. When you read a book like this and in a very accessible way, he’s making a lot of the same critique about orthodox economics that we’ve been making. And he’s also synthesizing a lot of the same conclusions and there’s different ways of talking about it. He calls it progressive capitalism. We call it market humanism or middle out economics. But we’re all really coming to the same conclusion and to the same place. And assuming we survive the November election and our climate crisis, it’s encouraging. It really looks like there’s this new consensus that’s emerging, and it’s not just some crazy vanity project at Civic Ventures.
Nick Hanauer:
No, I think that there is a tiny bit of hope. And anyway, just what a privilege to get to talk to Joe about his past and hilarious about him and Milton Friedman.
Goldy:
Yeah.
Nick Hanauer:
Unbelievable. What a fraud.
Goldy:
One of the worst people. And really, we didn’t discuss it. It’s funny that he didn’t back up his argument, Stiglitz, with numbers or anything because Friedman had numbers. He did economics. But as we’ve learned in subsequent years, a lot of his numbers were fraudulent.
Nick Hanauer:
He cooked the books.
Goldy:
Yeah, he cooked the books on a lot of his stuff. So again, and I want to make a point to our listeners, economists can be really wonky, and sometimes these books can be difficult to read. This is not one of those cases. It’s a very accessible and well-written book. Highly recommend it. The Road to Freedom: Economics and the Good Society. You can purchase it at your favorite online monopolist or at your favorite local bookstore. And of course, there is a link in the show notes.
Speaker 6:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer, follow our writing on Medium at Civic Skunk Works and peek behind the podcast scenes on Instagram at Pitchfork Economics. As always, from our team at Civic Ventures, thanks for listening. See you next week.