On January 8, the Toronto Star featured on its editorial page a commentary by Joseph Stiglitz. The former chief economist of the World Bank vaguely predicts stagflation – stagnation plus inflation – and expresses his concern about how this will affect workers and consumers. He worries that government and central bank policies will exacerbate the pain experienced by these people through misguided policy choices. This expression of compassion is indicative of why Stiglitz has frequently been lauded by those on the left . He is seen as a more sensible economist than the outright corporate apologists who generally represent the breed. Stiglitz’s criticisms of his former employer for failing to live up to its promises to raise the living standards of the poor, are taken as evidence that he is on the side of the anti-globalization activists. However, this ‘ally’ should be approached with caution.
Stiglitz begins the commentary with the following line: "The world economy has had several good years." This, he claims, is evidenced by the growth in global GDP, led by India and China. It is in his reliance upon gross domestic product to judge global economic well-being where Stiglitz betrays his grounding in standard economic theory. This theory has served as the ideological justification for pro-corporate globalization policies. No adherent should be considered an ally of those working for a better world.
The past few years of growing global output have been matched by unprecedented resource consumption and waste production. It is not a coincidence that environmental concern has increased over the same years. We are consuming well beyond the planet’s carrying capacity. Furthermore, the increase in output has not ‘trickled-down,’ and global inequality has likely worsened. Thankfully, more and more people are recognizing these twin realities and are trying to do something about them, including identifying common causes. But, for the likes of Stiglitz, the economy is viewed in aggregate and in isolation. The complex qualitative meaning beyond the numbers are obscured and largely ignored. Lip-service concern is paid to ‘workers’ and ‘consumers.’ The larger context, however, remains out-of-sight; even as stories of poverty and pollution fill the news pages of the papers that publish Stiglitz’s words. The concern expressed for the well-being of workers and consumers is frequently used to criticize environmental activists, as though jobs and the environment were entirely separate issues – with the former trumping the latter.
Stiglitz’s celebration of China and India is indicative of his narrow, economist’s vision. China’s increasing contribution to global production has come at the cost of severe environmental destruction. It has been suggested that the country’s air pollution has caused hundreds of thousands of premature deaths. High levels of water use and pollution by the growing industrial sector leave a large portion of the population without access to clean drinking water. India may be an emerging high-tech powerhouse, but it is also a model of inequality. Last year, the country passed Japan for the most billionaires in Asia with 36 members in the ten digit wealth club. At the same time, food insecurity is the reality for more than a third of the country’s population.
Stagflation is worrisome. Many people will lose their jobs, their savings and their homes. However, global production needs to be reduced if we are to avoid environmental collapse. It is the residents of the economic North who should bear the majority of the costs, as they are largely responsible for the planet’s current environmental predicament. Most of this burden should fall on the shoulders of the rich (millions of dollars), the very rich (tens of millions of dollars), the über-rich (hundreds of millions of dollars) and the obscenely über-rich (billions of dollars) because of their at-all-costs profit-seeking in the business world, their corrupting influence over government and their excessive consumption habits. Yet, these people will be the last to feel the effects of the economic and environmental crisis of their making. Certainly some fortunes will be lost, but many will also be entrenched and augmented. The wealthy will be best placed to protect themselves from the environmental consequences, while the poor will see their meager resources further depleted.
Few would deny the intimate and necessary relationship between the environment, production and consumption. Yet, isolation of the ‘economic’ facets of society is the starting point for mainstream economists. If there was ever a time for ‘Big Picture’ analysis, this is it. That means the myopic economists must be displaced from their perch atop the policy-advising hierarchy. Instead of being awarded prominent space to make social commentary they should be mocked for their naive and misleading reductionism. The fiction that informs their world-view has contributed to the present situation and can play no part in rescuing us, except perhaps in showing us what not to do.