In 2011, Stiglitz was named as one of the 100 most influential people in the world[14] by Time magazine. Stiglitz's work focuses on income distribution from a Georgist perspective, asset risk management, corporate governance, and international trade. He is the author of several books, the latest being The Road to Freedom (2024), People, Power, and Profits (2019), The Euro: How a Common Currency Threatens the Future of Europe (2016), The Great Divide: Unequal Societies and What We Can Do About Them (2015), Rewriting the Rules of the American Economy: An Agenda for Growth and Shared Prosperity (2015), and Creating a Learning Society: A New Approach to Growth Development and Social Progress (2014).[15] He is also one of the 25 leading figures on the Information and Democracy Commission launched by Reporters Without Borders.[16] According to the Open Syllabus Project, Stiglitz is the fifth most frequently cited author on college syllabi for economics courses.[17]
Stiglitz was born in Gary, Indiana[18] into a Jewish[19] family. His mother was Charlotte (née Fishman), a schoolteacher, and his father was Nathaniel David Stiglitz, an insurance salesman.[20][21] Stiglitz attended Amherst College, where he was a National Merit Scholar, active on the debate team, and president of the student government.[22] During his senior year at Amherst College, he studied at the Massachusetts Institute of Technology (MIT), where he later pursued graduate work.[22] In Summer 1965, he moved to the University of Chicago to do research under Hirofumi Uzawa who had received an NSF grant.[23] He studied for his PhD from MIT from 1966 to 1967, during which time he also held an MIT assistant professorship.[24] Stiglitz stated that the particular style of MIT economics suited him well, describing it as "simple and concrete models, directed at answering important and relevant questions."[3]
Stiglitz has played a number of policy roles throughout his career. He served in the Clinton administration as the chair of the President's Council of Economic Advisers (1995–1997).[24] At the World Bank, he served as a senior vice-president and the chief economist from 1997 to 2000.[34] He was fired by the World Bank for expressing dissent with its policies.[35] Stiglitz has advised American president Barack Obama, but has criticized the Obama Administration's financial-industry rescue plan.[36] He said whoever designed the Obama administration's bank rescue plan is "either in the pocket of the banks or they're incompetent."[37]
In October 2008, he was asked by the President of the United Nations General Assembly to chair a commission drafting a report on the reasons for and solutions to the 2007–2008 financial crisis.[38] In response, the commission produced the Stiglitz Report.
On July 25, 2011, Stiglitz participated in the "I Forro Social del 15M" organized in Madrid, expressing his support to the 15M Movement protestors.[39]
Stiglitz was the president of the International Economic Association from 2011 to 2014.[40]
On September 27, 2015, the United Kingdom Labour Party announced that Stiglitz was to sit on its Economic Advisory Committee along with five other world-leading economists.[41]
Contributions to economics
Stiglitz at a conference in Mexico in 2009
After the 2018 mid-term elections in the United States, he wrote a statement about the importance of economic justice to the survival of democracy worldwide.[42]
Risk aversion
After getting his Ph.D. from M.I.T. in 1967, Stiglitz co-authored one of his first papers with Michael Rothschild for the Journal of Economic Theory in 1970.[43] Stiglitz and Rothschild built upon works by economists such as Robert Solow on the concept of risk aversion.[citation needed] Stiglitz and Rothschild showed three plausible definitions of a variable X being 'more variable' than a variable Y were all equivalent – Y being equal to X plus noise, every risk-averse agent preferring Y to X, and Y having more weight in its tails, and that none of these were always consistent with X having a higher statistical variance than Y – a commonly used definition at the time. In a second paper, they analyzed the theoretical consequences of risk aversion in various circumstances, such as an individual's savings decisions and a firm's production decisions.[citation needed]
Henry George theorem
Stiglitz made early contributions to a theory of public finance stating that an optimal supply of local public goods can be funded entirely through capture of the landrents generated by those goods (when population distributions are optimal). Stiglitz dubbed this the 'Henry George theorem' in reference to the radical classical economistHenry George who famously advocated for land value tax. The explanation behind Stiglitz's finding is that rivalry for public goods takes place geographically, so competition for access to any beneficial public good will increase land values by at least as much as its outlay cost. Furthermore, Stiglitz shows that a single tax on rents is necessary to provide the optimal supply of local public investment. Stiglitz also shows how the theorem could be used to find the optimal size of a city or firm.[44][45]
Much of Stiglitz's work on information economics demonstrates situations in which incomplete information prevents markets from achieving social efficiency. His paper with Andrew Weiss showed that if banks use interest rates to infer information about borrowers' types (adverse selection effect), or to encourage their actions following borrowing (incentive effect), then credit will be rationed below the optimal level, even in a competitive market.[46] Stiglitz and Rothschild showed that in an insurance market, firms have an incentive to undermine a 'pooling equilibrium', where all agents are offered the same full-insurance policy, by offering cheaper partial insurance that would only be attractive to the low-risk types, meaning that a competitive market can only achieve partial coverage of agents.[47] Stiglitz and Grossman showed that trivially small information acquisition costs prevent financial markets from achieving complete informational efficiency, since agents will have an incentive to free-ride on others' information acquisition, and acquire this information indirectly by observing market prices.[48]
Stiglitz, together with Avinash Dixit, created a tractable model of monopolistic competition that was an alternative to traditional perfect-competition models of general equilibrium. They showed that in the presence of increasing returns to scale, the entry of firms is socially too small.[49] The model was extended to show that when consumers have a preference for diversity, entry can be socially too large. The modeling approach was used by Paul Krugman in his analysis of the non-comparative advantage trading patterns.[50]
In the Shapiro–Stiglitz model of efficiency wages, workers are paid at a level that dissuades shirking. This prevents wages from dropping to market clearing levels. Full employment cannot be achieved because workers would shirk if they were not threatened with the possibility of unemployment. Because of this, the curve for the no-shirking condition (labeled NSC) goes to infinity at full employment.
Stiglitz also did research on efficiency wages, and helped create what became known as the "Shapiro–Stiglitz model" to explain why there is unemployment even in equilibrium, why wages are not bid down sufficiently by job seekers (in the absence of minimum wages) so that everyone who wants a job finds one, and to question whether the neoclassical paradigm could explain involuntary unemployment.[51] An answer to these puzzles was proposed by Shapiro and Stiglitz in 1984: "Unemployment is driven by the information structure of employment".[51] Two basic observations undergird their analysis:
Unlike other forms of capital, humans can choose their level of effort.
It is costly for firms to determine how much effort workers are exerting.
Wages do not fall enough during recessions to prevent unemployment from rising. If the demand for labor falls, this lowers wages. But because wages have fallen, the probability of 'shirking' (workers not exerting effort) has risen. If employment levels are to be maintained, through a sufficient lowering of wages, workers will be less productive than before through the shirking effect. As a consequence, in the model, wages do not fall enough to maintain employment levels at the previous state, because firms want to avoid excessive shirking by their workers. So, unemployment must rise during recessions, because wages are kept 'too high'.
Possible corollary: Wage sluggishness. Moving from one private cost of hiring (w∗) to another private cost of hiring (w∗∗) will require each firm to repeatedly re-optimize wages in response to shifting unemployment rate. Firms cannot cut wages until unemployment rises sufficiently (a coordination problem).
Each firm employs too few workers, because the cost of employing too many workers would be faced by the firm alone, while the cost of unemployment is shared by the firm and its competitors, indeed it is shared by all firms that pay taxes in the country. This means that firms do not "internalize" the "external" cost of unemployment – they do not factor how large-scale unemployment harms society when assessing their own costs. This leads to a negative externality as marginal social cost exceeds the firm's marginal cost (MSC = Firm's Private Marginal Cost + Marginal External Cost of increased social unemployment)[clarification needed]
There are also positive externalities: each firm increases the asset value of unemployment for all other firms when they hire during recessions. By creating hypercompetitive labor markets, all firms (the winners when laborers compete) experience an increase in value. However, this effect of increased valuation is very unapparent, because the first problem (the negative externality of sub-optimal hiring) clearly dominates since the 'natural rate of unemployment' is always too high.
Practical implications of Stiglitz's theories
The practical implications of Stiglitz's work in political economy and their economic policy implications have been subject to debate.[54] Stiglitz himself has evolved his political-economic discourse over time.[55]
Once incomplete and imperfect information is introduced, Chicago-school defenders of the market system cannot sustain descriptive claims of the Pareto efficiency of the real world. Thus, Stiglitz's use of rational-expectations equilibrium assumptions to achieve a more realistic understanding of capitalism than is usual among rational-expectations theorists leads, paradoxically, to the conclusion that capitalism deviates from the model in a way that justifies state action – socialism – as a remedy.[56]
The effect of Stiglitz's influence is to make economics even more presumptively interventionist than Samuelson preferred. Samuelson treated market failure as an exception to the general rule of efficient markets. But the Greenwald-Stiglitz theorem posits market failure as the norm, establishing "that government could potentially almost always improve upon the market's resource allocation." And the Sappington-Stiglitz theorem "establishes that an ideal government could do better running an enterprise itself than it could through privatization"[57]
As David L. Prychitko discusses in his "critique" to Whither Socialism?, he thought that Stiglitz seems generally correct,[citation needed] though it still leaves how the coercive institutions of the government[neutrality is disputed] should be constrained and what the relation is between the government and civil society.[58]
Stiglitz always had a poor relationship with Treasury Secretary Lawrence Summers.[60] In 2000, Summers successfully petitioned for Stiglitz's removal, supposedly in exchange for World Bank President James Wolfensohn's re-appointment – an exchange that Wolfensohn denies took place. Whether Summers ever made such a blunt demand is questionable – Wolfensohn claims he would "have told him to *** himself".[61]
Stiglitz resigned from the World Bank in January 2000, a month before his term expired.[62] The Bank's president, James Wolfensohn, announced Stiglitz's resignation in November 1999 and also announced that Stiglitz would stay on as Special Advisor to the President, and would chair the search committee for a successor.
Joseph E. Stiglitz said today [Nov. 24, 1999] that he would resign as the World Bank's chief economist after using the position for nearly three years to raise pointed questions about the effectiveness of conventional approaches to helping poor countries.[63]
In this role, he continued criticism of the IMF, and, by implication, the US Treasury Department. In April 2000, in an article for The New Republic, he wrote:
They'll say the IMF is arrogant. They'll say the IMF doesn't really listen to the developing countries it is supposed to help. They'll say the IMF is secretive and insulated from democratic accountability. They'll say the IMF's economic 'remedies' often make things worse – turning slowdowns into recessions and recessions into depressions. And they'll have a point. I was chief economist at the World Bank from 1996 until last November, during the gravest global economic crisis in a half-century. I saw how the IMF, in tandem with the U.S. Treasury Department, responded. And I was appalled.
Stiglitz's protector-of-sorts at the World Bank, Wolfensohn, had privately empathized with Stiglitz's views, but was worried for his second term, which Summers had threatened to veto.[citation needed] Stanley Fischer, deputy managing director of the IMF, called a special staff meeting and informed the gathering that Wolfensohn had agreed to fire Stiglitz. Meanwhile, the bank's External Affairs department told the press that Stiglitz had not been fired; his post had merely been abolished.[64]
In a September 19, 2008 radio interview, with Aimee Allison and Philip Maldari on Pacifica Radio's KPFA 94.1 FM in Berkeley, United States, Stiglitz implied that President Clinton and his economic advisors would not have backed the North American Free Trade Agreement (NAFTA) had they been aware of stealth provisions, inserted by lobbyists, that they overlooked.
Commission on the Measurement of Economic Performance and Social Progress
At the beginning of 2008, Stiglitz chaired the Commission on the Measurement of Economic Performance and Social Progress, also known as the Stiglitz-Sen-Fitoussi Commission, initiated by President Sarkozy of France. The Commission held its first plenary meeting on April 22–23, 2008, in Paris. Its final report was made public on September 14, 2009.[65]
Commission of Experts on Reforms of the International Monetary and Financial System
In 2010, Stiglitz acted as an advisor to the Greek government during the Greek debt crisis. He appeared on Bloomberg TV for an interview on the risks of Greece defaulting, in which he stated that he was very confident that Greece would not default. He went on to say that Greece was under "speculative attack" and though it had "short-term liquidity problems ... and would benefit from Solidarity Bonds", the country was "on track to meet its obligations".[69]
The next day, during a BBC interview, Stiglitz stated that "there's no problem of Greece or Spain meeting their interest payments". He argued nonetheless, that it would be desirable and needed for all of Europe to make a clear statement of belief in social solidarity and that they "stand behind Greece". Confronted with the statement: "Greece's difficulty is that the magnitude of debt is far greater than the capacity of the economy to service", Stiglitz replied, "That's rather absurd".[citation needed]
In 2012, Stiglitz described the European austerity plans as a "suicide-pact".[70] In 2015, he said that the programmer of austerity in Greece had been "an enormous mistake", that the International Monetary Fund, European Central Bank and the European Commission had "criminal responsibility for causing a major recession".[71] He argued that Greek debt should be written off.[71]
Scotland
Since March 2012, Stiglitz has been a member of the Scottish Government's Fiscal Commission Working Group, which oversees the work to establish a fiscal and macroeconomic framework for an independent Scotland on behalf of the Scottish Council of Economic Advisers. Together with Professors Andrew Hughes Hallett, Sir James Mirrlees and Frances Ruane, Stiglitz will "advise on the establishment of a credible Fiscal Commission which entrenches financial responsibility and ensures market confidence".[72]
Labour Party
In July 2015, Stiglitz endorsed Jeremy Corbyn's campaign in the Labour Party leadership election. He said: "I am not surprised at all that there is a demand for a strong anti-austerity movement around increased concern about inequality. The promises of New Labour in the UK and of the Clintonites in the US have been a disappointment."[73][74][75]
Whenever there are "externalities" – where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated – markets will not work well. But recent research has shown that these externalities are pervasive, whenever there is imperfect information or imperfect risk markets – that is always.
The real debate today is about finding the right balance between the market and government. Both are needed. They can each complement each other. This balance will differ from time to time and place to place.
In an interview in 2007, Stiglitz explained further:[80]
The theories that I (and others) helped develop explained why unfettered markets often not only do not lead to social justice, but do not even produce efficient outcomes. Interestingly, there has been no intellectual challenge to the refutation of Adam Smith's invisible hand: individuals and firms, in the pursuit of their self-interest, are not necessarily, or in general, led as if by an invisible hand, to economic efficiency.
The preceding claim is based on Stiglitz's 1986 paper, "Externalities in Economies with Imperfect Information and Incomplete Markets",[81] which describes a general methodology to deal with externalities and for calculating optimal corrective taxes in a general equilibrium context. In the opening remarks for his prize acceptance at Aula Magna,[82] Stiglitz said:[83]
I hope to show that Information Economics represents a fundamental change in the prevailing paradigm within economics. Problems of information are central to understanding not only market economics but also political economy, and in the last section of this lecture, I explore some of the implications of information imperfections for political processes.
Support for anti-austerity movement in Spain
On July 25, 2011, Stiglitz participated in the "I Forro Social del 15M" organized in Madrid (Spain) expressing his support for the anti-austerity movement in Spain.[39] During an informal speech, he made a brief review of some of the problems in Europe and in the United States, the serious unemployment rate and the situation in Greece. "This is an opportunity for economic contribution social measures", argued Stiglitz, who made a speech about the way authorities are handling the political exit to the crisis. He encouraged those present to respond to the ideas with good ideas. "This does not work, you have to change it", he said.
Criticism of rating agencies
Stiglitz has been critical of rating agencies, describing them as the "key culprit" in the 2007–2008 financial crisis, noting "they were the party that performed the alchemy that converted the securities from F-rated to A-rated. The banks could not have done what they did without the complicity of the rating agencies."[84]
Stiglitz co-authored a paper with Peter Orszag in 2002 titled "Implications of the New Fannie Mae and Freddie Mac Risk-Based Capital Standard" where they stated "on the basis of historical experience, the risk to the government from a potential default on GSE debt is effectively zero." However, "the risk-based capital standard ... may fail to reflect the probability of another Great Depression-like scenario."[85]
Views on risks associated with government-sponsored enterprises
In a 2002 paper coauthored with Jonathan Orszag, and Peter R. Orszag, Stiglitz asserted "the probability of default by the GSEs [Government-Sponsored Enterprises] is extremely small".[86]
Criticism of Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership
Stiglitz argues that relying solely on business self-interest as the means of achieving the well-being of society and economic efficiency is misleading, and that instead "What is needed is stronger norms, clearer understandings of what is acceptable – and what is not – and stronger laws and regulations to ensure that those that do not behave in ways that are consistent with these norms are held accountable".[91]
Land value tax (Georgism)
Stiglitz argues that land value tax would improve the efficiency and equity of agricultural economies. Stiglitz believes that societies should rely on a generalized Henry George principle to finance public goods, protect natural resources, improve land use, and reduce the burden of rents and taxes on the poor while increasing productive capital formation. Stiglitz advocates taxing "natural resource rents at as close to 100 percent as possible" and that a corollary of this principle is that polluters should be taxed for "activities that generate negative externalities."[92] Stiglitz therefore asserts that land value taxation is even better than its famous advocate Henry George thought.[93]
Views on the eurozone
In a September 2016 interview Stiglitz stated that "the cost of keeping the Eurozone together probably exceeds the cost of breaking it up."[94]
In the 1990s, he wrote that "countries in North America and Europe should eliminate all tariffs and quotas (protectionist measures)".[95] He now advises the eurozone countries to control their trade balance with Germany by means of export/import certificates or "trade chits" (a protectionist measure).[96][97][98]
Citing Keynesian theory, he explains that trade surpluses are harmful: "John Maynard Keynes pointed out that surpluses lead to weak global aggregate demand – countries running surpluses exert a "negative externality" on trading partners. Indeed, Keynes believed it was surplus countries, far more than those in deficit, that posed a threat to global prosperity; he went so far as to advocate a tax on surplus countries".[99] From the beginning of 1930, Keynes stopped believing in free trade, denounced the theory of comparative advantage (the basis of free trade) and adhered to protectionism.[100][101]
Stiglitz writes: "Germany's surplus means that the rest of Europe is in deficit. And the fact that these countries import more than they export contributes to the weakness of their economies". He thinks that surplus countries are getting richer at the expense of deficit countries. He notes that the euro is the cause of this deficit and that as the trade deficit declines GDP would rise and unemployment would fall: "The euro system means that Germany's exchange rate cannot increase compared to other euro area members. If the exchange rate were to rise, Germany would have more difficulty exporting and its economic model, based on strong exports, would cease. At the same time, the rest of Europe would export more, GDP would rise, and unemployment would fall".[99]
He also thinks that the rest of the world should impose a carbon-adjustment tax (a protectionist measure) on American exports that do not comply with global standard.[102]
Advice for the United States
Joseph Stiglitz
Contrary to Keynesian theory and these analyses on the eurozone, he argues that the United States should not rebalance the trade account, and that the country can no longer apply protectionist measures to protect or recreate the well-paying manufacturing jobs, saying: "The very Americans who have been among the losers of globalization stand to be among the losers of a reversal of globalization. History cannot be put into reverse".[103]
On the other hand, he admits that as trade deficit declines, "GDP would rise and unemployment would fall", further stating: "...the fact that these countries are importing more than they are exporting contributes to their weak economies."[99] He also notes that trade deficit is correlated with loss of manufacturing jobs: the increase in the "value of the dollar will lead to larger trade deficits and fewer manufacturing jobs".[104]
Contrary to most economics historians who argue that tariffs played only a minor if any role in the Great Depression,[105][106][107] Stiglitz, to convince the United States not to use protectionist policies, says that tariffs would be harmful to the United States economy today because it contributed to the Great Depression: "Following that, U.S. exports fell by some 50 percent—contributing to our Great Depression".[103]
He denounces the "trickle-down" policies of liberalism and neoliberalism (laissez-faire)[108][109][110] However, he calls for lowering trade barriers and promoting free trade (policy of deregulation of foreign trade which is part of the laissez-faire economic model).[111]
According to him, it is not China (which has a large trade surplus) that makes "trade war", but the United States (which has a large trade deficit).[103] He advises China to take sanctions against the United States[103] 'where it hurts economically and politically' if the US tries to raise tariffs to protect its industry, saying: "For example, cutbacks in purchases by China will lead to more unemployment in congressional districts that are vulnerable, influential, or both.[103] ... China can retaliate anywhere it chooses, such as by using trade restrictions to target jobs in the congressional districts of those who support US tariffs.[110] ... China may be more effective in targeting its retaliation to cause acute political pain. ... It's anybody's guess who can stand the pain better. Will it be the US, where ordinary citizens have already suffered for so long, or China, which, despite troubled times, has managed to generate growth in excess of 6%?[112]"
Stiglitz does not want the United States to stop free trade. According to him, if China limits globalization, it will not hurt them, but if the United States stops with the process of free trade, it will be harmful. About China, according to him, if China depends less on economic globalization, it will not be negative for the country.[103] He writes that the decline in exports from China to the U.S. may not "hurt them more than it hurt us" because "China's government has far more control over the country's economy than our government has over ours; and it is moving from export dependence to a model of growth driven by domestic demand." Regarding the United States, he writes the opposite and advice to apply the opposite of the Keynesian theory of trade deficits seen earlier:[99] "Walking away from globalization may reduce our imports, but it will also reduce exports in tandem. And, almost surely, jobs will be destroyed faster than they will be created: there may even be fewer net manufacturing jobs". "[The] erection of barriers to trade and the movement of people and ideas more likely than not will be one in which the U.S. almost surely will lose."[103]
In early 2017, he wrote that "the American middle class is indeed the loser of globalization" (the diminution of international trade regulations as well as tariffs, taxes) and "China, with its large emerging middle class, is among the big beneficiaries of globalization". "Thanks to globalization, in terms of purchasing-power parity, China actually has already become the largest economy in the world in September 2015".[103] However, contrary to what he wrote earlier, he later argued in February 2017 that the fall in wages and the disappearance of well-paid jobs in the United States, are not due to free trade or globalization, but rather are inevitable collateral damage to the march of economic progress and technological innovation: "The United States can only push for advanced manufacturing, which requires higher skill sets and employs fewer people. Rising inequality, meanwhile, will continue ...".[110] In addition, on December 5, 2017, contrary to what he wrote earlier, he wrote that the drop in wages in the United States is due to the actions of multinational companies rather than the globalization and the trade account imbalances between countries caused by free trade: "It was an agenda written by and for large multinational companies, at the expense of workers".[104]
In 2016, he said he believes that the economic situation of the United States is critical: "As the economists Anne Case and Angus Deaton showed in their study published in December 2015, life expectancy among middle-age white Americans is declining, as rates of suicides, drug use, and alcoholism increase. A year later, the National Center for Health Statistics reported that life expectancy for the country as a whole has declined for the first time in more than 20 years."[110] ... With the incomes of the bottom 90% having stagnated for close to a third of a century (and declining for a significant proportion), the health data simply confirmed that things were not going well for swaths of the country".[112]
Green economy
Stiglitz has called for a transition to a green economy.[113][114][115] He supported the Green New Deal. In 2019, he wrote that "The Green New Deal would stimulate demand, ensuring that all available resources were used; and the transition to the green economy would likely usher in a new boom. Trump's focus on the industries of the past, like coal, is strangling the much more sensible move to wind and solar power. More jobs by far will be created in renewable energy than will be lost in coal."[116] Stiglitz described the climate crisis as humanity's World War III.[116]
Views on taxation
Stiglitz maintained the super-rich should pay taxes up to 70% to help deal with increasing inequality. Stiglitz stated a worldwide income tax rate of 70% on biggest earners "would clearly make sense". Stiglitz maintained society would become more egalitarian and cohesive. Stiglitz said a wealth taxes on fortunes acquired during many generations would have a larger influence. Stiglitz maintains most billionaires acquired much of their wealth through luck. He maintains Elizabeth Warren proposing a 2% tax for people with assets of over $50 million and 3% on those with over $1 billion was "very reasonable" and would raise significant revenues that could improve some United States problems.[117]
Books
Along with his technical economic publications (over 300 technical articles), Stiglitz is the author of books on issues from patent law to abuses in international trade.
Whither Socialism? (1994)
Whither Socialism? is based on Stiglitz's Wicksell Lectures, presented at the Stockholm School of Economics in 1990 and presents a summary of information economics and the theory of markets with imperfect information and imperfect competition, as well as being a critique of both free market and market socialist approaches (see Roemer critique, op. cit.). Stiglitz explains how the neoclassical, or Walrasian model ("Walrasian economics" refers to the result of the process which has given birth to a formal representation of Adam Smith's notion of the "invisible hand", along the lines put forward by Léon Walras and encapsulated in the general equilibrium model of Arrow–Debreu), may have wrongly encouraged the belief that market socialism could work. Stiglitz proposes an alternative model, based on the information economics established by the Greenwald–Stiglitz theorems.
One of the reasons Stiglitz sees for the critical failing in the standard neoclassical model, on which market socialism was built, is its failure to consider the problems that arise from lack of perfect information and from the costs of acquiring information. He also identifies problems arising from its assumptions concerning completeness.[118]
Globalization and Its Discontents (2002)
In Globalization and Its Discontents, Stiglitz argues that what are often called "developing economies" are, in fact, not developing at all, and puts much of the blame on the IMF.
Stiglitz stresses: "Recent advances in economic theory" (in part referring to his own work) "have shown that whenever information is imperfect and markets are incomplete, which is to say always, and especially in developing countries, then the invisible hand works most imperfectly." As a result, Stiglitz continues, governments can improve the outcome by well-chosen interventions. Stiglitz argues that when families and firms seek to buy too little compared to what the economy can produce, governments can fight recessions and depressions by using expansionary monetary and fiscal policies to spur the demand for goods and services. At the microeconomic level, governments can regulate banks and other financial institutions to keep them sound. They can also use tax policy to steer investment into more productive industries and trade policies to allow new industries to mature to the point at which they can survive foreign competition. And governments can use a variety of devices, ranging from job creation to manpower training to welfare assistance, to put unemployed labor back to work and cushion human hardship.
Stiglitz argues that the IMF has done great damage through the economic policies it has prescribed that countries must follow in order to qualify for IMF loans, or for loans from banks and other private-sector lenders that look to the IMF to indicate whether a borrower is creditworthy. The organization and its officials, he argues, have ignored the implications of incomplete information, inadequate markets, and unworkable institutions – all of which are especially characteristic of newly developing countries. As a result, Stiglitz argues, the IMF has often called for policies that conform to textbook economics but do not make sense for the countries to which the IMF is recommending them. Stiglitz seeks to show that these policies have been disastrous for the countries that have followed them.
The Roaring Nineties (2003)
The Roaring Nineties is Stiglitz's analysis of the boom and bust of the 1990s. Presented from an insider's point of view, firstly as chair of President Clinton's Council of Economic Advisors, and later as chief economist of the World Bank, it continues his argument on how misplaced faith in free-market ideology led to the global economic issues of today, with a perceptive focus on US policies.
New Paradigm for Monetary Economics (2003)
This section needs expansion. You can help by adding to it. (August 2019)
Fair Trade for All (2005)
In Fair Trade for All, authors Stiglitz and Andrew Charlton argue that it is important to make the trading world more development friendly.[119] The idea is put forth that the present regime of tariffs and agricultural subsidies is dominated by the interests of former colonial powers and needs to change. The removal of the bias toward the developed world will be beneficial to both developing and developed nations. The developing world is in need of assistance, and this can only be achieved when developed nations abandon mercantilist-based priorities and work towards a more liberal world trade regime.[120]
Making Globalization Work (2006)
Making Globalization Work surveys the inequities of the global economy, and the mechanisms by which developed countries exert an excessive influence over developing nations. Dr. Stiglitz argues that through tariffs, subsidies, an over-complex patent system and pollution, the world is being both economically and politically destabilized. Stiglitz argues that strong, transparent institutions are needed to address these problems. He shows how an examination of incomplete markets can make corrective government policies desirable.
Stiglitz is an exception to the general pro-globalization view of professional economists, according to economist Martin Wolf.[121] Stiglitz argues that economic opportunities are not widely enough available, that financial crises are too costly and too frequent, and that the rich countries have done too little to address these problems. Making Globalization Work[122] has sold more than two million copies.
Stability with Growth (2006)
In Stability with Growth: Macroeconomics, Liberalization and Development, Stiglitz, José Antonio Ocampo (United Nations Under-Secretary-General for Economic and Social Affairs, until 2007), Shari Spiegel (managing director, Initiative for Policy Dialogue – IPD), Ricardo Ffrench-Davis (Main Adviser, Economic Commission for Latin America and the Caribbean – ECLAC) and Deepak Nayyar (Vice Chancellor, University of Delhi) discuss the current debates on macroeconomics, capital market liberalization and development, and develop a new framework within which one can assess alternative policies. They explain their belief that the Washington Consensus has advocated narrow goals for development (with a focus on price stability) and prescribed too few policy instruments (emphasizing monetary and fiscal policies), and places unwarranted faith in the role of markets. The new framework focuses on real stability and long-term sustainable and equitable growth, offers a variety of non-standard ways to stabilize the economy and promote growth, and accepts that market imperfections necessitate government interventions. Policy-makers have pursued stabilization goals with little concern for growth consequences, while trying to increase growth through structural reforms focused on improving economic efficiency. Moreover, structural policies, such as capital market liberalization, have had major consequences for economic stability. This book challenges these policies by arguing that stabilization policy has important consequences for long-term growth and has often been implemented with adverse consequences. The first part of the book introduces the key questions and looks at the objectives of economic policy from different perspectives. The third part presents a similar analysis for capital market liberalization.
The Three Trillion Dollar War (2008)
The Three Trillion Dollar War (co-authored with Linda Bilmes) examines the full cost of the Iraq War, including many hidden costs. The book also discusses the extent to which these costs will be imposed for many years to come, paying special attention to the enormous expenditures that will be required to care for very large numbers of wounded veterans. Stiglitz was openly critical of George W. Bush at the time the book was released.[123]
In Freefall: America, Free Markets, and the Sinking of the World Economy, Stiglitz discusses the causes of the 2008 recession/depression and goes on to propose reforms needed to avoid a repetition of a similar crisis, advocating government intervention and regulation in a number of areas. Among the policymakers he criticizes are George W. Bush, Larry Summers, and Barack Obama.[124]
The Price of Inequality (2012)
From the jacket: As those at the top continue to enjoy the best health care, education, and benefits of wealth, they often fail to realize that, as Joseph E. Stiglitz highlights, "their fate is bound up with how the other 99 percent live ... It does not have to be this way. In The Price of Inequality Stiglitz lays out a comprehensive agenda to create a more dynamic economy and fairer and more equal society"
The book received the Robert F. Kennedy Center for Justice and Human Rights 2013 Book Award, given annually to the book that "most faithfully and forcefully reflects Robert Kennedy's purposes – his concern for the poor and the powerless, his struggle for honest and even-handed justice, his conviction that a decent society must assure all young people a fair chance, and his faith that a free democracy can act to remedy disparities of power and opportunity."[125]
Creating a Learning Society: A New Approach to Growth, Development, and Social Progress (2014)
Creating a Learning Society (co-authored with Bruce C. Greenwald) casts light on the significance of this insight for economic theory and policy. Taking as a starting point Kenneth J. Arrow's 1962 paper "Learning by Doing", they explain why the production of knowledge differs from that of other goods and why market economies alone typically do not produce and transmit knowledge efficiently. Closing knowledge gaps and helping laggards learn are central to growth and development. But creating a learning society is equally crucial if we are to sustain improved living standards in advanced countries.
The Great Divide: Unequal Societies and What We Can Do About Them (2015)
From the jacket: In The Great Divide, Joseph E. Stiglitz expands on the diagnosis he offered in his best-selling book The Price of Inequality and suggests ways to counter America's growing problem. Stiglitz argues that inequality is a choice – the cumulative result of unjust policies and misguided priorities.
The Euro: How a Common Currency Threatens the Future of Europe (2016)
From the description: "Stiglitz dismantles the prevailing consensus around what ails Europe, demolishing the champions of austerity while offering a series of plans that can rescue the continent--and the world--from further devastation." According to book review aggregator Literary Hub, it received pan reviews.[126]
People, Power and Profits: Progressive Capitalism for an Age of Discontent (2019)
From the jacket: Stiglitz shows how a middle-class life can once again be attainable by all. An authorities account of the predictable dangers of free market fundamentalism and the foundations of progressive capitalism, People, Power, and Profits shows us an America in crisis, but also lights a path through this challenging time.
Joseph Stiglitz and Kamal Nath
Measuring What Counts: The Global Movement for Well-Being (2019)
Stiglitz and his co-authors point out that the interrelated crises of environmental degradation and human suffering of our current age demonstrate that "something is fundamentally wrong with the way we assess economic performance and social progress." They argue that using GDP as the chief measure of our economic health does not provide an accurate assessment of the economy or the state of the world and the people living in it.[127][128]
The Road to Freedom (2024)
In The Road to Freedom Stiglitz challenges the claim that neoliberalism is morally superior to its alternatives. The book's subtitle is Economics and the Good Society.
Papers and conferences
Stiglitz wrote a series of papers and held a series of conferences explaining how such information uncertainties may have influence on everything from unemployment to lending shortages. As the chairman of the Council of Economic Advisers during the first term of the Clinton Administration and former chief economist at the World Bank, Stiglitz was able to put some of his views into action. For example, he was an outspoken critic of quickly opening up financial markets in developing countries. These markets rely on access to good financial data and sound bankruptcy laws, but he argued that many of these countries did not have the regulatory institutions needed to ensure that the markets would operate soundly.
In July 2020, Stiglitz alongside Hamid Rashid, the chief of Global Economic Monitoring at the UN Department of Economic and Social Affairs, published a report, pointing out that the quantitative easing policy implemented by the US after the 2007–2008 financial crisis, had "basically exported a debt bubble to developing countries".[129][130]
Awards and honors
In addition to being awarded the Nobel Memorial prize, Stiglitz has over 40 honorary doctorates and at least eight honorary professorships as well as an honorary deanship.[131][132][133]
Stiglitz, Joseph E.; Newbery, David M.G. (1981). The theory of commodity price stabilization: a study in the economics of risk. Oxford Oxford New York: Clarendon Press Oxford University Press. ISBN9780198284178.
Stiglitz, Joseph E. (1989). The economic role of the state. Oxford, UK Cambridge, Massachusetts, US: Wiley-Blackwell. ISBN9780631171355.
Stiglitz, Joseph E.; Boadway, Robin (1994). Economics and the Canadian economy. New York: W.W. Norton & Company. ISBN9780393965117.
Stiglitz, Joseph E.; Yusuf, Shahid (2001). Rethinking the East Asia miracle. Washington, D.C. New York: World Bank Oxford University Press. ISBN9780195216004.
Stiglitz, Joseph E. (2001). Chang, Ha-Joon (ed.). Joseph Stiglitz and the World Bank: the rebel within. London, England: Anthem Press. ISBN9781898855538.
Stiglitz, Joseph E.; Sah, Raaj K. (1992). Peasants versus city-dwellers: taxation and the burden of economic development. Oxford New York: Clarendon Press Oxford University Press. ISBN9780199253579. (Reprinted 2005.)
Stiglitz, Joseph E.; Charlton, Andrew (2005). Fair trade for all: how trade can promote development. Oxford New York: Oxford University Press. ISBN9780199290901.
Stiglitz, Joseph E.; Greenwald, Bruce C. (2015). Creating a learning society: a new approach to growth, development, and social progress. Columbia: Columbia University Press. ISBN9780231175494.
Stiglitz, Joseph E. (2016). The Euro: And its Threat to the Future of Europe. Allen Lane. ISBN9780241258156.
Stiglitz, Joseph E. (2019). People, Power and Profits: Progressive Capitalism for an Age of Discontent. Allen Lane. ISBN9780241399231.
Stiglitz, Joseph E. (1993), "Market socialism and neoclassical economics", in Bardhan, Pranab; Roemer, John E. (eds.), Market socialism: the current debate, New York: Oxford University Press, ISBN9780195080490.
Stiglitz, Joseph E. (2009), "Regulation and failure", in Moss, David A.; Cisternino, John A. (eds.), New perspectives on regulation, Cambridge, Massachusetts: The Tobin Project, pp. 11–23, ISBN9780982478806. Pdf version.
Stiglitz, Joseph E. (2009), "Simple formulae for optional income taxation and the measurement of inequality", in Kanbur, Ravi; Basu, Kaushik (eds.), Arguments for a better world: essays in honor of Amartya Sen | Volume I: Ethics, welfare, and measurement, Oxford New York: Oxford University Press, pp. 535–66, ISBN9780199239115.
Stiglitz, Joseph E.; Bilmes, Linda. (2012), "Estimating the costs of war: Methodological issues, with applications to Iraq and Afghanistan", in Garfinkel, Michelle; Skaperdas, Stergios (eds.), Oxford Handbook of the Economics of Peace and Conflict, Oxford UK: Oxford University Press, pp. 275–317, ISBN9780195392777. [1]
Stiglitz, Joseph E. (May 1974). "Alternative theories of wage determination and unemployment in LDC's: the labor turnover model". The Quarterly Journal of Economics. 88 (2). Oxford Journals: 194–227. doi:10.2307/1883069. JSTOR1883069.
Stiglitz, Joseph E.; Rothschild, Michael (November 1976). "Equilibrium in competitive insurance markets: an essay on the economics of imperfect information". The Quarterly Journal of Economics. 90 (4). Oxford Journals: 629–49. doi:10.2307/1885326. JSTOR1885326.
Stiglitz, Joseph E.; Dixit, Avinash K. (June 1977). "Monopolistic competition and optimum product diversity". The American Economic Review. 67 (3). American Economic Association: 297–308. JSTOR1831401.
Stiglitz, Joseph E.; Newbery, David M.G. (December 1979). "The theory of commodity price stabilisation rules: welfare impacts and supply responses". The Economic Journal. 89 (356). Royal Economic Society: 799–817. doi:10.2307/2231500. JSTOR2231500.
1980–1989
Grossman, Sanford J.; Stiglitz, Joseph E. (June 1980). "On the Impossibility of Informationally Efficient Markets". The American Economic Review. 70 (3): 393–408. JSTOR1805228.
Stiglitz, Joseph E. (March 1987). "The causes and consequences of the dependence of quality on price". The American Economic Review. 25 (1). American Economic Association: 1–48. JSTOR2726189.
Stiglitz, Joseph E. (August 1996). "Some lessons from the East Asian miracle". World Bank Research Observer. 11 (2). World Bank: 151–77. doi:10.1093/wbro/11.2.151.
Stiglitz, Joseph E. (March 1998). "Redefining the role of the state – What should it do? How should it do it? And how should these decisions be made?". Paper Presented at the Tenth Anniversary of MITI Research Institute, Tokyo. Pdf version.
Also as: Stiglitz, Joseph E. (2001). "Redefining the role of the state – What should it do? How should it do it? And how should these decisions be made?". In Chang, Ha-Joon (ed.). Joseph Stiglitz and the World Bank: the rebel within. London: Anthem Press. pp. 94–126. ISBN9781898855538.
2000–2009
Stiglitz, Joseph E. (Spring 1998). "Distinguished lecture on economics in government: the private uses of public interests: incentives and institutions". Journal of Economic Perspectives. 12 (2). American Economic Association: 3–22. doi:10.1257/jep.12.2.3. S2CID154446858.
Stiglitz, Joseph E. (May 18, 2007). "Prizes, not patents". Post-Autistic Economics Review. 42. World Economics Association: 48–50.
Joseph E. Stiglitz, "Measuring What Matters: Obsession with one financial figure, GDP, has worsened people's health, happiness and the environment, and economists want to replace it", Scientific American, vol. 323, no. 2 (August 2020), pp. 24–31.
Video and online sources
Stiglitz, Joseph E. (2007). Committee hearing (via YouTube) (Speech). World Bank & Global Poverty, House Financial Services Committee (C-SPAN). Washington, D.C. Archived from the original on 2021-11-07. Retrieved October 29, 2014.
Stiglitz, Joseph E. (presenter); Sarasin, Jacques (director) (March 2009). Around the world with Joseph Stiglitz. Arte France / Les Productions Faire Bleu / Swan productions. Archived from the original on 2014-10-29. Retrieved 2014-10-29. Original French title Le monde selon Stiglitz.
Stiglitz, Joseph E.; Bilmes, Linda (February 28, 2008). The three trillion dollar war. Panel discussion regarding their new book. Columbia University.
Stiglitz, Joseph E. (February 9, 2010). "Bloomberg News"(Video) (YouTube). Interviewed by Andrea Catherwood. Retrieved October 29, 2014. Stiglitz says EU should defend Greece from speculators
Stiglitz, Joseph E. (guest); Hendry, Hugh (guest); Casajuana, Carlos (guest) (February 9, 2010). "Newsnight"(Video) (BBC). Interviewed by Emily Maitlis. Retrieved October 29, 2014. What should Europe do about Greece?
Stiglitz, Joseph E. (February 9, 2010). "Bloomberg News"(Video) (YouTube). Interviewed by Andrea Catherwood. Retrieved October 29, 2014. Stiglitz says EU should defend Greece from speculators
^Stiglitz, Joseph E.; Sen, Amartya; Fitoussi, Jean-Paul (2010-05-18). Mismeasuring Our Lives: Why GDP Doesn't Add Up. The New Press. ISBN9781595585196.
^Bruce C. Greenwald & Joseph E. Stiglitz: Keynesian, New Keynesian and New Classical Economics. Oxford Economics Papers, 39, March 1987, pp. 119–33. (PDF; 1,62 MB) Archived 2011-05-13 at the Wayback Machine
^Bruce C. Greenwald & Joseph E. Stiglitz: Examining Alternative Macroeconomic Theories. Brookings Papers on Economic Activity, No. 1, 1988, pp. 201–70. (PDF; 5.50 MB) Archived 2011-05-13 at the Wayback Machine
^Smith, Noah (13 January 2017). "Tribal warfare in economics a thing of the past". The Australian Financial Review. Fairfax Media. Bloomberg. Look on the Wikipedia pages of economists Joseph Stiglitz and Greg Mankiw or any of a number of prominent economists. On the sidebar on the right, you'll see an entry for "school or tradition". Both Stiglitz and Mankiw are listed as "New Keynesian". That makes absolutely no sense whatsoever. Stiglitz and Mankiw's research is in totally different areas. Stiglitz did work on asymmetric information, efficiency wages, land taxes and a host of other microeconomic phenomena ... Nor are their policy positions even remotely similar – Stiglitz is a hero to the left, while Mankiw is a small-government conservative. In fact, Mankiw did important research on some models called "New Keynesian". Stiglitz did not.
^Rothschild, M.; Stiglitz, J.E. (1970). "Increasing risk: I. A definition". Journal of Economic Theory. 2 (3): 225–243. doi:10.1016/0022-0531(70)90038-4.
^Richard J. Arnott & Joseph E. Stiglitz, 1979. "Aggregate Land Rents, Expenditure on Public Goods, and Optimal City Size," The Quarterly Journal of Economics, Oxford University Press, vol. 93(4), pages 471–500.
^Stiglitz, J.E. (1977) The theory of local public goods. In: Feldstein, M.S. and R.P. Inman (eds.) The Economics of Public Services. MacMillan, London, pp. 274–333.
^Stiglitz, Joseph; Weiss, Andrew (February 1987). Macro-Economic Equilibrium and Credit Rationing (Working Paper No. 2164) (Report). Cambridge, MA: National Bureau of Economic Research. doi:10.3386/w2164.
^Rothschild, Michael; Stiglitz, Joseph (1976), "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information", Foundations of Insurance Economics, Huebner International Series on Risk, Insurance and Economic Security, vol. 14, Springer Netherlands, pp. 355–375, doi:10.1007/978-94-015-7957-5_18, ISBN9789048157891
^Dixit, Avinash K.; Stiglitz, Joseph E. (2001), "Monopolistic competition and optimum product diversity (May 1974)", The Monopolistic Competition Revolution in Retrospect, Cambridge University Press, pp. 70–88, doi:10.1017/cbo9780511492273.004, ISBN9780511492273
^Friedman, Benjamin M. (August 15, 2002). "Globalization: Stiglitz's Case". Nybooks.com. The New York Review of Books, Volume 49, Number 13. Retrieved October 29, 2013.
^"Stiglitz documentation". Commission on the Measurement of Economic Performance and Social Progress. September 14, 2009. Archived from the original on 20 July 2015.
^John Maynard Keynes (June 1933). "National Self-Sufficiency". The Yale Review. 22 (4): 755–769. Archived from the original on 15 May 2011. Retrieved 14 May 2021.
^Northcott, Michael S. (2006). "Review of Fair Trade For All by J.E. Stiglitz and Andrew Charlton". Studies in World Christianity. 12 (3): 282–284. doi:10.1353/swc.2006.0025. S2CID144250262.
^"Why Globalization Works" (Yale University Press 2004) ISBN978-0-300-10252-9, p. 8. Also Wolf criticizes World Bank heavily (pp. xiii–xv).
^Krupa, Joel (June 7, 2010). "Guiding the Invisible Hand". Archived from the original on May 16, 2011. Retrieved December 28, 2010.{{cite news}}: CS1 maint: unfit URL (link)
^"2009 Summit Highlights Photo". Dr. Joseph E. Stiglitz, recipient of the Nobel Prize in Economics, and his wife Anya, between sessions at La Residence in the Franschhoek Valley during the 2009 International Achievement Summit in South Africa.
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