Big Ideas, Big Dreams - Joseph Stiglitz
Economic Spotlight Series
Joseph Stiglitz is a Nobel prize winning economist, academic at Columbia University, former chief economist at the World Bank and was an economic advisor in President Bill Clinton’s administration.
Stiglitz has written several books, many of which have hit a timely key point in a public debate. The most recent example is his 2024 book, The Road to Freedom: Economics and the Good Society. He dives into the limits of our current economic system with respect to freedom. He explores how we need to be bolder with curtailing the freedoms of some of the more powerful economic entities in order to create more freedom for everyone. Examples he talks about include regulating environmental polluters and social media, in order that we create a healthier and less harmful environment for everyone. He explains that it’s not a new idea. He takes us right back to the ten commandments and frames them as regulations in order that everyone benefits. He argues that this form of progessive capitalism is the shift we need to make for an economy that creates a good society.
Globalization and its discontents
During my final year at university, studying economics and international business, I’d been working hard for my exams, but the lethargy and boredom of revising everyday had started to kick in. I found myself diverting away from the reading room in the library and into the campus bookshop instead. Not a exactly a wild act of rebellion, I accept that, but from the door it was a book cover that caught my eye. It actually made my stomach flip with its title alone.
It was early-2003 and I had spent the past few years studying the wonders of the global economy. We were analysing the miracles of the Irish Tiger and Chinese Dragon and the relative peace in Europe, attributed to the economic interdependence achieved through the EU institutions and its policies.
Think then at my fear, even horror, to see a loud and proud title in my campus bookshop, Globalization and its Discontents.
What!?
I couldn’t fathom at first glance how there could be an entire book about the discontents of globalisation when I knew all about the prosperity and opportunity it had created for so many around the globe.
I came closer, picked up a copy and studied the cover, to find that this wasn’t a wacky conspiracy theorist on the shelves in my local bookshop, but someone with Stiglitz’s credentials, who seemed to know what he was talking about.
Throwing caution to the wind, given I was living off a student loan at the time, I bought the book and duly took it back to the reading room. I felt like I’d found a secret, a personal diary I shouldn’t be reading, or a closely held family recipe that wasn’t meant for my eyes.
What’s the big idea?
The big idea I took from Stiglitz, when I condense it right down, is that the economy isn’t serving us anywhere near as well as it could. In fact it can do more harm than good to many groups, where suffering becomes the price of so-called economic prosperity.
In the pages of his book I found something compelling. Stiglitz shared his candid view and experiences, which I’d never been exposed to before that day. Economic and international development was driven by the World Bank and International Monetary Fund (IMF) that, in many instances, was responsible for prolonged pain.
Stiglitz explained that these powerful institutions were providing financial support to economies in crisis, but on strict conditions that they adopted policies, ready or not, that complied with that institution’s doctrine, otherwise known as the ‘Washington consensus’. Policies such as opening up to international free trade, privatisation of industry and low levels of government spending and intervention. He gave examples of the harm it was doing, such as the crisis that had only recently struck in Argentina.
As I was reading, I recalled my economic history lecturer telling us about the US economy in its early days and how its development had depended on government investment in its railway infrastructure and protectionist policies. I was starting to understand the power and hypocrisy that Stiglitz was pointing to, that he wanted to expose.
I was outraged on two levels. First, that the blessing I’d believed globalisation to be had a dark side to it and was a lot more complex than I’d ever realised. Second, I was only just learning about this complexity now, just as I was about to finish my degree. I wondered why this critical perspective had never come up previously, when I’d been taught by so many smart people from so many different backgrounds.
I decided to take a risk in my exams that year. My essay responses included Stiglitz’s perspective, as a critical contrast going beyond the limits of what I’d been taught. Feeling nervous but a little excited, I was blown away a few days after an exam when one of my lecturers stopped me on campus, “Gillian, your exam, it was brilliant!” I don’t think he was meant to tell me that and it certainly wasn’t something that had ever happened to me before, but it’s a moment I’ve never forgotten.
That moment showed me that it is worth seeking out other perspectives, other voices and incorporating them, especially when they’re uncomfortable and challenge our existing point of view. I learnt that it’s OK, even important, that I change my mind if and when a compelling argument comes along.
How might this influence your work?
There are so many ways that Stiglitz might influence you and your work, but here are three I want to draw out.
1. Is it really the only option?
One influence might be that our policies, economic or otherwise, might have better alternatives worth exploring. The policies we become wedded to can have unintended consequences, or even worse, we accurately predict harmful consequences but see the suffering as inevitable and unavoidable if we’re to meet our objective.
When that’s happening, is it really the only option?
For example, when we’re going through a restructure at work, is it inevitable that there are stark winners and losers? Are there other ways we can meet our objective without inflicting brutal circumstances on people who work hard and want to continue to do so?
2. “I’ve changed my mind”
Stiglitz didn’t always hold these views, but became perceived as disruptive because of the views he came to hold during his prestigious role at the World Bank. What I admire is that once he saw a compelling reason to change his mind, he did exactly that. He showed that he continued to learn and evolve his perspective and valued accuracy and truth more than his ego.
It takes courage to do what he did, which is why it’s so rare to see leaders and public figures willingly accept that their view is outdated and they’re ready to reconsider.
How can you be that kind of leader in your work and openly change your mind?
I worked with a chief executive willing to do just that a couple of weeks ago. She went from being incredibly uncomfortable with the amount of time people were spending working from home and wanting people back in the office, to seeing how flexible ways of working could actually drive better performance in her organisation. She was open about that shift with her team and I admire her courage and openness to her shifting perspective.
3. What perspective am I missing?
A consensus can only be broken when a we shed light on a new perspective that had previously been in the dark. If that perspective was there all along, but hidden in the shadows, then the consensus was never real anyway. It had only ever been a comfortable story that merely served to maintain the status quo for its own sake.
Stiglitz shone a light on the harm being done by the Washington consensus, but it wasn’t the light that created the harm. He took the time to take another perspective, the perspective of the country in crisis, rather than his own.
Seeking out perspectives that we’re missing can only help us speed up the process of progress by gathering insight and being clear about what really matters.
Which valuable, maybe uncomfortable, perspectives are you missing in your work right now?
Recently I’ve been running focus groups with frontline workers to understand how flexible ways of working can be adopted in hard to flex roles and drive better results in the business. By talking to these people I’m opening up my mind to so many fresh possibilities of healthier, safer and more productive work where people can have a much better home life too. Without talking to them directly I wouldn’t understand the problems fully, missing an opportunity to make the best impact for that business and its people.
Here’s how it impacted me and my work
Stiglitz set off a chain reaction for me that has been ongoing now for more than twenty years. I’ve never stopped looking for ways in which we can have a healthy economy and how I can contribute to that. Reading Globalization and its discontents was a powerful, irreversible turning point for me.
Other economists and their ideas followed, shedding further light on the harm our economy can do. It wasn’t until 2012 when Kate Raworth came along with her concept of a Doughnut Economy that I had something clear and compelling to work towards, not just something harmful to move away from.
Stiglitz started me on a lifelong journey to figure out how I can contribute to a healthy economy. My way of doing that is to focus on leading for a better future of work, because it fits and that’s what I’m good at. Developing workforce strategy and creating more flexible workplaces is all traceable back to that moment on campus when I knew I had to pick up his book, no matter how confronting it felt. I’m so glad I did.