The Weekend Australian - Review - - Books - Frank Car­ri­gan Robert Gray’s

1 per cent own­ing more than a third of the na­tion’s wealth’’.

For Stiglitz, the broad­en­ing of the wealth gap au­gurs ill for democ­racy, and he tra­verses the many ways the so­cial com­pact is un­rav­el­ling un­der the pres­sure of two na­tions emerg­ing in the US.

At some stage in his anal­y­sis, if Stiglitz is to dis­tin­guish him­self from the crit­ics who fo­cus on the mo­ral as­pect of the dis­in­te­gra­tion of the US, he has to put his eco­nomic stamp on the sources of in­equal­ity. He re­alises this and notes: ‘‘ We all grap­ple with the ques­tion of how the high and grow­ing in­equal­ity in the US can be ex­plained.’’ Hav­ing made this co­gent point, Stiglitz must be judged on the ef­fi­cacy of his re­sponse to his own ques­tion.

As it turns out, the lack of a rig­or­ous the­ory of free mar­ket eco­nom­ics per­me­ates this book. Stiglitz is a re­fined lib­eral but, strangely, he has noth­ing to say on the deeply am­biva­lent re­la­tion­ship of lib­er­al­ism and the un­equal distri­bu­tion of wealth. In essence, he fails to can­vass how the clas­si­cal lib­eral thinkers jus­ti­fied the in­equal­i­ties of mar­ket so­ci­eties. trav­eller must sub­mit / to the twin pow­ers / of com­merce and te­dium.’’

And so on, through all the things we know about, unre­deemed by lan­guage or in­sight: the flight, the food, the dis­com­forts (‘‘The seat in front of him lunges at him / but doesn’t quite touch’’), the land­ing, the taxi, the ho­tel room,

Scep­tics will be un­der­whelmed by Stiglitz. They will take a leaf from clas­sic lib­er­als and ar­gue that a mar­ket so­ci­ety is un­der­pinned by free­dom of con­tract and for­mal le­gal equal­ity, and thus so­cial jus­tice pre­vails de­spite the un­equal di­vi­sion of in­come and wealth.

More­over, as all eco­nomic trans­ac­tions are vol­un­tary, some peo­ple ac­cu­mu­late more cap­i­tal than oth­ers be­cause of the choices they make and the en­dow­ments they pos­sess to utilise re­sources and tech­nol­ogy.

Stiglitz’s fail­ure to en­gage with eco­nomic his­tory is re­spon­si­ble for his in­ca­pac­ity to il­lu­mi­nate at a deep level how the rich might a nap, a short walk to a restau­rant, a Scan­di­na­vian crime novel in the evening, the lux­ury of the bath­room next morn­ing, a call from an ex-stu­dent, hope of a sex­ual en­counter, a knock­back, the con­fer­ence types, the pompous pa­pers, the bitch­ing (Non­sense, the ti­tle of the book, is a fel­low pro­fes­sor’s get richer be­cause of the in­her­ent struc­tural features of a mar­ket econ­omy. It is one of the dis­con­cert­ing features of this book that a fa­mous econ­o­mist too of­ten falls into the trap of is­su­ing mo­ral sermons on be­half of those on the down­side of eco­nomic life in­stead of ex­ca­vat­ing the promethean forces that gen­er­ate wide­spread in­equal­ity.

Stiglitz recog­nises that ortho­dox eco­nomic the­ory has to be in­ter­ro­gated in or­der to probe to the heart of in­equal­ity and the so­cial poi­son that in­fects the fab­ric of Amer­i­can so­ci­ety. Yet, largely, he fails to ex­plore the con­cep­tual foun­da­tions of main­stream eco­nom­ics. The nar­row am­bit of his eco­nomic in­quiry pro­duces a re­stricted view of eco­nomic life. He makes the valu­able ob­ser­va­tion that there is a lack of sym­me­try of in­for­ma­tion among eco­nomic ac­tors. This is im­por­tant be­cause orthodoxy has thrived on claim­ing that equal in­for­ma­tion en­sures a com­pet­i­tive cli­mate for the price mech­a­nism to cre­ate a ra­tio­nal al­lo­ca­tion of re­sources. Stiglitz is right to note egal­i­tar­i­an­ism suf­fers when key in­for­ma­tion is the province of a priv­i­leged few.

The prob­lem, though, is that he lever­ages the asym­met­ri­cal na­ture of mar­ket in­for­ma­tion to build a case that it is the fun­da­men­tal dy­namic un­der­pin­ning in­equal­ity. Ac­cord­ing to Stiglitz, this is the phe­nom­e­non re­spon­si­ble for mo­nop­oly rent seek­ers who use their in­for­ma­tion aces to earn strato­spheric in­comes that widen the wealth gap.

In this sce­nario the in­for­ma­tion-poor are re­duced to im­pe­cu­nious cir­cum­stances by a ma­nip­u­la­tive in­ner cir­cle.The struc­tural forces and evo­lu­tion of the econ­omy re­spon­si­ble for mar­ket dis­tor­tions gets lost in the de­sire to blame lop­sided in­for­ma­tion cir­cuits and in­di­vid­ual ac­quis­i­tive­ness for in­equal­i­ties.

The up­shot of Stiglitz’s an­a­lyt­i­cal frame­work is to lay the blame for in­equal­ity and the eco­nomic cri­sis on an in­come distri­bu­tion cri­sis. His cure is to wrench po­lit­i­cal dom­i­nance away from the eco­nomic elite that is bent on fol­low­ing poli­cies that en­rich them­selves but at the cost of un­der-util­is­ing hu­man and pro­duc­tive re­sources that could spark a re­vival. He calls for the Washington leg­isla­tive process to turn a deaf ear to the busi­ness lob­bies bent on en­act­ing the poli­cies of the elite. It is time, he de­clares, for politi­cians to turn away from those pro­mul­gat­ing what he terms the deficit fetishism credo that pro­tects vested in­ter­est.

Stiglitz is­sues a clar­ion call to lift state ex­pen­di­ture and pay for it by rais­ing taxes on the wealthy. He avers this would put the un­em­ployed back to work and re­duce glar­ing in­come in­equal­ity.

But his mono­causal


omits judg­ment on what all his col­leagues are talk­ing about), din­ner with a fe­male aca­demic with whom he’s had a con­fer­ence af­fair, her lack of in­ter­est in re­sum­ing it, more con­fer­ence and gossip, his hav­ing his say from the floor and not be­ing able to com­mu­ni­cate an over-sub­tle point, his es­cape and walk down to the waterfront, a beer in the sun­light there, look­ing out to sea, find­ing a mo­men­tary ful­fil­ment. All of this is re­counted in a guarded jaunty mid­dle-class English man­ner.

Could it be such ex­pe­ri­ence is meant to con­vey an un­spo­ken sense of empti­ness? What is be­ing risked, though, is the im­i­ta­tive fal­lacy. Should a poem about chaotic feel­ings, for in­stance, be it­self form­less and chaotic? Mime­sis is a fun­da­men­tal tech­nique of po­etry, but it can be abused. For in­stance, Ten­nyson’s ‘‘ the mur­mur­ing of in­nu­mer­able bees / in im­memo­rial elms’’ seems rather comic — pro­duces a tol­er­ant smile for its self­con­scious­ness. Does Reid’s poem about numbed feel­ings get away with its own numb­ness? Read­ing it in some moods it seems men­tion of the con­tin­u­ing role of Amer­i­can busi­ness in strip­ping out ex­cess ca­pac­ity and re­struc­tur­ing in or­der to move labour out of sec­tors that are suf­fer­ing from over­ca­pac­ity and how this ap­proach of­fers a bet­ter hope of even­tual growth in em­ploy­ment and shrink­ing the in­come di­vide than government in­ter­ven­tion. Tech­ni­cal progress and ra­tio­nal­i­sa­tion com­bine to pro­duce higher pro­duc­tiv­ity and this opens up the prospect for a new phase of eco­nomic growth.

Al­most ev­ery pro­posal put for­ward by Stiglitz has its lin­eage in the great Bri­tish lib­eral in­ter-war econ­o­mist John May­nard Keynes. Only Keynes had a prodi­gious mind and a vi­sion to match: he went far be­yond fo­cus­ing on in­come distri­bu­tion is­sues when the Great De­pres­sion struck; he was alert to sys­temic prob­lems that could have a long-term im­pact on mar­ket ef­fi­ciency.

Stiglitz’s recipe for eco­nomic ills is ba­si­cally more of the fine-tuning mon­e­tary mea­sures that col­lapsed into stagfla­tion in the 1970s and re­sulted in the tri­umph of ne­olib­eral poli­cies. He side­steps the bolder vein in Keynes’s think­ing that noted bank­ing and fi­nance chan­nels could ex­pe­ri­ence a fund­ing cri­sis due to be­ing drained by bad debts ac­cu­mu­lated by the type of spec­u­la­tive ma­nia the world econ­omy has just ex­pe­ri­enced.

And if spec­u­la­tive fi­nance wreaked havoc, Keynes un­der­stood that prof­itable pro­duc­tion would ex­pe­ri­ence a crunch on its credit lines and that government would need to step in to pro­vide the cap­i­tal in­vest­ment nec­es­sary for pro­tect­ing jobs and in­comes.

Stiglitz is not in Keynes’s league but he has an un­canny gift for pro­mot­ing ideas that opin­ion-mak­ers run with. As Bri­tain deals with a deep re­ces­sion and in­equal­i­ties ap­proach­ing Vic­to­rian lev­els, Deputy Prime Min­is­ter Nick Clegg has spo­ken of an eco­nomic war that re­quires a wealth tax to make sure the pain is shared around and a rup­ture to so­cial co­he­sion avoided. Clegg is singing from the Stiglitz hymn sheet.

As the Aus­tralian min­ing boom cools, in­ter­est­ing eco­nomic and po­lit­i­cal times loom. Trea­surer Wayne Swan has al­ready leaned on Stiglitz to rail against the min­ing mag­nates and their rent-seek­ing pro­cliv­i­ties while de­claim­ing about the per­ni­cious na­ture of the ef­fect of Aus­tralia’s top 0.1 per cent on our in­equal­ity is­sues. If the econ­omy ex­pe­ri­ences a slump and talk of shar­ing the pain comes into vogue in Aus­tralia, Swan and those who share his agenda now have a freshly minted book from Stiglitz to aid their cru­sade. al­most dar­ing; at other times, it feels so re­ces­sive as not to have much ef­fec­tive­ness at all. Is that beer to be con­sid­ered a suf­fi­cient point to the poem (un­pre­ten­tious­ness, the value of com­mon­place ex­pe­ri­ence), or is the lack of point its larger point?

The rest of Non­sense con­sists of a short se­ries of mu­sic hall songs, as if from World War I, which are not at all catchy, and a col­lec­tion of lyric po­ems ‘‘ cel­e­brat­ing ev­ery­day ex­pe­ri­ence’’, the jacket blurb says, which would ap­pear to con­tra­dict my in­ter­pre­ta­tion of Pro­fes­sor Win­terthorn’s Jour­ney as hav­ing a sup­pressed, although neg­a­tive, pas­sion to it. The short po­ems are in their bland­ness sim­i­lar to the main poem, but are clearly not part of some larger end.

If what I have con­jec­tured, then, is not the con­scious in­ten­tion of Pro­fes­sor Win­terthorn’s Jour­ney, nev­er­the­less, it is not un­usual for a work to be wiser than its au­thor.

A busi­ness­man averts his eyes as he walks past a home­less woman in New York City

The poet evokes the te­dium of a long-haul flight

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