Jagdish Bhagwati on "Capitalism's Petty Detractors"

Writing in the journal World Affairs, the great Columbia University economist Jagdish Bhagwati criticizes Nobel Prize-winner Joseph Stiglitz for his take on the current economic crisis:

Stiglitz made a much-cited claim that the current crisis was for capitalism (and markets) the equivalent of the collapse of the Berlin Wall. Now, we know that all analogies are imperfect, but this one is particularly dicey. When the Berlin Wall collapsed, we saw the bankruptcy of both authoritarian politics and an economics of extensive, almost universal, ownership of the means of production and central planning. We saw a wasteland. When Wall Street and Main Street were shaken by crisis, however, we witnessed merely a pause in prosperity, not a devastation of it.

Read the rest here. Reason on Bhagwati's In Defense of Globazilation here and his Free Trade Today here.

(Via Arts & Letters Daily)

Comments

[Xeones]

Haters hate because they can't conceive of a decentralized system controlled by semi-Darwinian forces rather than a centrally planned "rational" one.

[Thom]

Or, more often than not, they can conceive of it and quickly realize that they'll be worse off if those semi-Darwinian forces actually start penalizing them for engaging in non-productive forms of work.

[Wicks Cherrycoke]

Haters hate because a decentralized system has little or no place for "experts" like Joseph Stiglitz to amass power, influence and income by selling their "expertise" to central planners.

[T]

Haters hate because they can't conceive of a decentralized system controlled by semi-Darwinian forces rather than a centrally planned "rational" one.

It's the same logic behind conspiracy nuts. Somebody must be in charge! Or else how does all this stuff happen?

[juris imprudent]

It is the same thought process behind religious belief - God does the good stuff, Satan the bad.

Living in a world where no one is "in charge" is just too scary for most people.

[JW]

Some years ago, I overheard a conversation on a bus with those exact words about why the speaker feared the "fee market." I keed you not.

It was an older, lefty couple talking, that I saw frequently about the People's Republic of Takoma Park, MD. They were memorable because he looked like the Quaker Oats mascot.

[JW]

free market, damnit. Free! not fee....

[JB]

Congress has already given in to this paternalistic urge by passing the credit card act in May 2009. That law tried to keep banks from charging high interest rates and fees, but instead has only served to restrict available credit, especially for low-income borrowers.

The leftists don't believe anyone should engage in behavior they don't approve of beforehand.

[J_B]

Got my tabs screwed up on IE, no biggie, carry on, nothing to see here

[Xeones]

Yeah, T, it's so strange that they typically believe that evolutionary pressure occurs in biological systems, but not anywhere else.

[JW]

I won't let you teach this in the schools, you god-less market heathen!

Spare me your scientific economic theories. I'm not descended from creative destruction!

[Hazel Meade]

Now, if you'll follow my theory of "scientific Marxism", you'll find that economic life may be beautifully designed by the omniscient hands of our wise, benevolent loving father-leader.

[JW]

I was made in the Central Planner's image!

[PapayaSF]

I don't think that's correct. The left sees the free market as a Darwinian jungle in the worst sense, with the strong (rich) preying on the weak (poor). Their major error is to think that more government will fix this.

[Hazel Meade]

Well, they think that the economy can be designed in an orderly way, and moreover that society can be perfected. Such as below: With the proper leadership of the state (church), mankind can progress towards a perfect society (heaven).

The father-leader part goes with the authoritarianism, and probably hearkens back to pre-Christian times. God, the Roman Emperors, Jupiter, Zeus, God-Kings back to pre-history.

But the whole vision of the economy as a piece of clockwork rather than an evolving ecology is very much like "intelligent design".

[PapayaSF]

(Boy, the indenting got screwed up somehow. My first reply was to Xeones, not to Hazel.)

Hazel, we don't disagree. I believe leftists think of free markets as Darwinian in essence, and yet easily redesignable to make them fair.

[Jeffersonian]

The irony of this is that, if Darwinian selection is indeed the process by which Nature eliminates the less-fit and allows the more-fit to continue, leftist policies seem to implicitly embrace extinction as the solution to human existence.

[T]

so strange that they typically believe that evolutionary pressure occurs in biological systems, but not anywhere else.

Well, they miss the central insight of Darwin. The natural selection part is key. But a lot of them believe that evolution is progressing things to some higher plane, when in reality it's just better adapting organism/organizations to the environment.

[Jordan]

Jagdish Bhagwati criticizes Nobel Prize-winner Joseph Stiglitz for his take on the current economic crisis:

I want to know what Hugo Stiglitz thinks.

[JW]

So, wait now. We get Jeff Flake doing his Survivorman ripoff, but not the real economic story from the WaPo today: "No loo, no I do"

And I want a hat-tip, damnit!

[Xeones]

Another thing i've noticed is that so much progressive idealism is focused on making sure natural selection just doesn't occur anymore in ANY situation, from "too big to fail" bailouts to smoking bans to giant panda breeding programs.

[JW]

And, without irony, I suspect from many of the same people who would call you a "denier" based on their views of biological evolution.

[Mike in PA]

I've just been reading about this new Nobel prize winner for economics, Elinor Ostrom. Just another collectivist hack, it seems.

Damn, the Nobel committee have their heads buried deep up the arse of the State!

[Hazel Meade]

Well, actually her work seems to be on non-state mechanisms for governing common resources.

Sort of a left-libertarian perspective.

[Mike in PA]

Yeah, I've seen some of that, but it still sounds like collectivism to me. Kind of like she's finding a third way. As if the first way (the natural market) wasn't good enough. Oddly, her "non-state" mechanisms require a very pro-state mechanism to govern.

I may be early - I haven't read everything - but from what I've seen, it seems like a way to get people who dislike the State's power to buy into collective control.

[The Squatting Fields]

The 'Democratization of Credit' Is Over -- Now It's Payback Time

NEW YORK -- Karen King owes nearly $36,000, more than she's ever earned in a year.

All day long, bill collectors call. She hunts for a second job, sometimes skips meals, and stays with other family members at a grandfather's crowded apartment, trying to get out of debt and turn her life around.

She largely holds herself at fault. "Years ago, I lived for now. It was so stupid," the 28-year-old says. "It's depressing, but I can't live that life anymore." Now, she says, "I basically want to live for the future."

The recession has forced a financial reckoning for Americans across the income spectrum. The pressure is especially acute for the low-income Americans who relied on borrowing for daily expenses or to gain the trappings of middle-class life. Shifting credit practices over several decades had enabled them to live beyond their means by borrowing nearly as readily as the more affluent.

But the financial crisis and recession have reversed what some economists dubbed the "democratization of credit," forcing a tough adjustment on both low-income families and the businesses that serve them.

"We saw an extension of credit to a much deeper socioeconomic level, and they got access to the same credit instruments as middle-class and mainstream Americans," says Ronald Mann, a Columbia University law professor. Now, "it will be harder for families at the bottom of the income ladder to get credit cards," he says.

http://online.wsj.com/article/.....76713.html