After By Joseph E. Stiglitz May 30, 2019 – Project Syndicate

For the past 40 years, the United States and other advanced have been pursuing a free- agenda of low , deregulation, and cuts to social programs. There can no longer be any doubt that this approach has failed spectacularly; the only question is what will – and should – come next.

What kind of economic system is most to cuts for the rich, deregulation, and conducive to human wellbeing? That question shrinking or eliminating social programs. has come to define the current era, because, By contrast, the third camp advocates what I after 40 years of neoliberalism in the United call progressive , which prescribes a States and other advanced economies, we radically different economic agenda, based on know what doesn’t work. four priorities. The first is to restore the The neoliberal experiment – lower taxes on the balance between markets, the state, and civil rich, deregulation of labor and product society. Slow economic growth, rising markets, financialization, and – inequality, financial instability, and has been a spectacular failure. Growth is lower environmental degradation are problems born than it was in the quarter-century after World of the market, and thus cannot and will not be War II, and most of it has accrued to the very overcome by the market on its own. top of the income scale. After decades of Governments have a duty to limit and shape stagnant or even falling incomes for those markets through environmental, health, below them, neoliberalism must be occupational-safety, and other types of pronounced dead and buried. . It is also the government’s job to do what the market cannot or will not do, like Vying to succeed it are at least three major actively investing in basic research, political alternatives: far-right nationalism, technology, education, and the health of its center-left reformism, and the progressive left constituents. (with the center-right representing the neoliberal failure). And yet, with the exception The second priority is to recognize that the of the progressive left, these alternatives “wealth of nations” is the result of scientific remain beholden to some form of the ideology inquiry – learning about the world around us – that has (or should have) expired. and social organization that allows large The center-left, for example, represents groups of people to work together for the neoliberalism with a human face. Its goal is to common good. Markets still have a crucial role bring the policies of former US President Bill to play in facilitating social cooperation, but Clinton and former British Prime Minister they serve this purpose only if they are governed by the rule of law and subject to Tony Blair into the twenty-first century, democratic checks. Otherwise, individuals can making only slight revisions to the prevailing get rich by exploiting others, extracting wealth modes of financialization and globalization. through rent-seeking rather than creating Meanwhile, the nationalist right disowns wealth through genuine ingenuity. Many of globalization, blaming migrants and foreigners today’s wealthy took the exploitation route to for all of today’s problems. Yet as Donald get where they are. They have been well served Trump’s presidency has shown, it is no less by Trump’s policies, which have encouraged committed – at least in its American variant – 2

rent-seeking while destroying the underlying There is no magic bullet that can reverse the sources of wealth creation. Progressive damage done by decades of neoliberalism. But capitalism seeks to do precisely the opposite. a comprehensive agenda along the lines This brings us to the third priority: addressing sketched above absolutely can. Much will depend on whether reformers are as resolute in the growing problem of concentrated market combating problems like excessive market power. By exploiting information advantages, power and inequality as the private sector is in buying up potential competitors, and creating creating them. entry barriers, dominant firms are able to engage in large-scale rent-seeking to the A comprehensive agenda must focus on detriment of everyone else. The rise in education, research, and the other true sources corporate market power, combined with the of wealth. It must protect the environment and decline in workers’ bargaining power, goes a fight climate change with the same vigilance as long way toward explaining why inequality is the Green New Dealers in the US and so high and growth so tepid. Unless Extinction Rebellion in the United Kingdom. government takes a more active role than And it must provide public programs to ensure neoliberalism prescribes, these problems will that no citizen is denied the basic requisites of likely become much worse, owing to advances a decent life. These include economic security, in robotization and artificial intelligence. access to work and a living wage, health care and adequate housing, a secure retirement, and The fourth key item on the progressive agenda a quality education for one’s children. is to sever the link between economic power and political influence. Economic power and This agenda is eminently affordable; in fact, political influence are mutually reinforcing and we cannot afford not to enact it. The self-perpetuating, especially where, as in the alternatives offered by nationalists and US, wealthy individuals and may neoliberals would guarantee more stagnation, spend without limit in elections. As the US inequality, environmental degradation, and moves ever closer to a fundamentally political acrimony, potentially leading to undemocratic system of “one dollar, one vote,” outcomes we do not even want to imagine. the system of checks and balances so necessary Progressive capitalism is not an oxymoron. for democracy likely cannot hold: nothing will Rather, it is the most viable and vibrant be able to constrain the power of the wealthy. alternative to an ideology that has clearly This is not just a moral and political problem: failed. As such, it represents the best chance economies with less inequality actually we have of escaping our current economic and perform better. Progressive-capitalist reforms political malaise. thus have to begin by curtailing the influence of in politics and reducing wealth Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and Chief inequality. Economist at the Roosevelt Institute.