Global Economic News Digest

Yet Another Covid Victim: Capitalism

07 oct 2021
author: Farah Nayeri
source: The New York Times

This is an article from World Review: The State of Democracy, a special section that examines global policy and affairs, and is published in conjunction with the annual Athens Democracy Forum.


The coronavirus pandemic has exacerbated the gap between the haves and have-nots and thrown capitalism into question: That is the conclusion reached by Joseph Stiglitz and Hervé Berville, two economists who spoke at this year’s Athens Democracy Forum, an annual event held in association with The 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 — said in a pre-conference interview that the private sector had proven incapable of responding alone to the global health challenge and that government had a big role to play.


Professor Stiglitz, do you think that the pandemic will pave the way for a more socially conscious capitalism?


Yes, very much so, and for several reasons. We saw that, as in the financial crisis of 2008, markets were not quite as “good” as we thought. They weren’t resilient. They couldn’t make face masks, protective gear, complicated products like that. We had supply-side interruptions.


The image that markets can solve all problems has really been undermined. We recognize that in this moment of crisis, we turn to government to help us confront the macroeconomics and the vulnerabilities, but also to protect us in terms of public health. And we’re not going to turn to the private sector next time we have a pandemic. What we really need is a stronger public sector.


How has capitalism as a system and a way of life been thrown into question?


The pandemic has exposed some of the rawness of our capitalism: the inequalities. It has shown the strength of the private sector in being able to produce the vaccines so quickly, but also the weakness. They still can’t produce enough vaccines to protect the rest of the world, and we’re going to be hit by another wave, potentially coming from some developing country where the disease hasn’t been controlled.


You point out in your books and speeches that markets pay no attention to social justice and income distribution. Yet capitalism is built on the notion of free markets. How are we going to change things?


Through politics and through a change in societal norms. Let me just give you a couple of examples. This kind of awareness has led the vast majority of the people in the Business Roundtable [an association of chief executives of leading U.S. companies] to support a move away from shareholder capitalism to stakeholder capitalism. Even if not all of them really mean it in their heart of hearts, that change in the way they conceive of it will have effects over time.


I’ve been at meetings where a C.E.O. of a large company said: “I hadn’t realized how bad we’d been paying our workers, that a large fraction of our workers were not getting a livable wage. And when I recognized it, I changed it.” His consciousness, before, was minimizing his labor costs. And his consciousness now is much more: What kind of enterprise do we want to have?


What kind of measures should governments introduce?


The first obligation is to make sure that everybody who is able and willing to have a job can get a job. That’s our first failure, and we need to correct that.


Over the next 30 years, we have an enormous amount of work to do to make the green transition, to make sure that everybody has an adequate education, to have a decent infrastructure and so forth.


What about a universal basic income?


Given all of the other things that we need to do, I think we still need to focus our spending, our support payments on those who can’t work and who are the most needy. If we had more money, it would be different, but right now, I don’t see that. We have so many other needs"