Summary of The Road to Freedom by Joseph E. Stiglitz: Economics and the Good Society E-Book
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Summary of The Road to Freedom by Joseph E. Stiglitz: Economics and the Good Society
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Nobel prize winner Joseph E. Stiglitz critiques America's economic system and political ideology, highlighting its failures. He argues that "free" markets have led to crises like the financial and opioid crises, fueling populist movements. Stiglitz suggests reimagining systems and embracing collective action for a more inclusive society.
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Veröffentlichungsjahr: 2024
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PREFACE
Freedom is a fundamental human value, but many advocates fail to consider the true meaning of freedom. The current conservative interpretation of freedom is superficial, misguided, and ideologically motivated. The Right claims to defend freedom, but their definition and pursuit have led to a vast reduction in most citizens' freedoms. The conflation of free markets with economic freedom and economic freedom with political freedom has led to shortcomings in this regard.
Republican leaders like George W. Bush and Ronald Reagan emphasized the importance of sustained economic growth and free markets. They argued that the Constitution should protect economic freedoms, which are essential for liberty, self-government, and personal independence. Four essential economic freedoms are: (1) freedom to work, (2) freedom to enjoy the fruits of one's labor, (3) freedom to own and control one's property, and (4) freedom to participate in a free market.
These conceptions of freedom contrast with the ideals articulated by President Franklin Delano Roosevelt, who emphasized freedom from want and fear. A person facing extremes of want and fear is not free, nor is someone whose ability to have a full life restrained because they were born into poverty.
In Gary, Indiana, African Americans and immigrants faced limited economic freedom due to economic downturns and military service. This lack of freedom was evident in the lives of many who had to join the military or use their military training to secure a better life. The current conservative view of freedom is superficial, misguided, and ideologically motivated, leading to a reduction in the freedoms of most citizens.
The author argues that the concept of freedom in America has evolved over time, with presidential administrations expanding the freedom of banks through financial deregulation and liberalization. This led to increased profits for bankers but also posed significant risks for society. The 2008 financial crisis exposed the cost of this, as millions of Americans lost their freedom from fear and want, and the entire financial system collapsed. The author argues that the concept of freedom was founded on principles of freedom, but it did not mean freedom for everyone, including the enslaved, women without property, and those without property. The author also discusses the connection between economic and political freedoms, arguing that a nation could have one set of rights without the other. The author suggests that economists can contribute to discussions about freedom by addressing trade-offs and understanding the nature of trade-offs. The author also highlights the importance of collective action, which often requires some form of coercion due to free-rider problems. The author concludes that true advocates of deep, meaningful freedom are aligned with the progressive movement, and they and the center-left parties need to reclaim the freedom agenda.
This book aims to provide a coherent explanation of freedom from the perspective of twenty-first-century economics, as John Stuart Mill did in his classic book On Liberty (1859). The world has changed over the past century, and our understanding of the economy and society has evolved. Today, we grapple with issues such as climate change, guns, pollution, the right to abortion, and the freedom to express gender identity. The role of social coercion and its reactions to these challenges requires a rethinking of basic concepts, including freedom.
The most important moral value of freedom is freedom conceived as having inherent ties to notions of equity, justice, and well-being. Hayek and Friedman, prominent mid-twentieth-century defenders of unfettered capitalism, argued that without free markets and free enterprise, individual freedom could not exist. However, this broadened notion of freedom has been given short shrift by certain strands in economic thinking.
The author argues that neoliberalism, the belief in unregulated, unfettered markets, has led to massive inequalities and provided fertile ground for populists. Neoliberalism's crimes include freeing financial markets to precipitate the largest financial crisis in three-quarters of a century, freeing trade to accelerate deindustrialization, and freeing corporations to exploit consumers, workers, and the environment.
Globalization and the concept of rules play a significant role in shaping the ideal of freedom. Rules grant freedoms and impose constraints, generating differential fates for different regions and nations. Free trade agreements, for example, constrain the freedom of developing countries and emerging markets while expanding multinational corporations' exploitation. The moral legitimacy of property rights and the distribution of income and wealth generated by the economy are also important questions.
The founders of the American Republic had a flawed view of the meaning of fundamental concepts like property and liberty. They recognized the property rights of slaveowners but did not recognize the rights of the enslaved to enjoy the fruits of their labor. Understanding the processes by which ideologies are formed and transmitted within society is crucial.
The language of freedom has constrained our ability to reason soundly about what kind of economic, political, and social system best enhances society's well-being. The language of coercion and freedom has become an emotive part of our political vocabulary, with freedom being good and coercion being bad.
In many contexts, the word "coercion" doesn't seem helpful as all individuals and states face constraints. In a market economy, budget constraints are socially determined and result from economic forces shaped by socially determined rules. The simplistic use of the word "freedom" by the Right has impaired a critical societal freedom: the freedom to choose an economic system that could enhance freedom for most citizens.
The author's academic career began by demonstrating that competitive markets are not efficient, especially when information is imperfect. However, his stints in the Clinton administration and at the World Bank led him to believe that the deficiencies in our economy and prevailing economic approaches were more profound. He argued that the problems in our economy and society were not inevitable but rather a matter of choice, shaped by neoliberalism.
The author's concern for natural resources and the environment led to the creation of the 1995 Intergovernmental Report on Climate Change and the creation of the Wellbeing Economy Government Alliance. The central tenet of this movement is that what matters is not only material goods and services, as measured by GDP, but also overall individual and societal well-being, which includes an assessment of the state of freedom.
The author argues that neoliberalism generates corrosive inequalities, engenders selfishness and dishonesty, and narrows vision and values. He believes that a good society must incorporate how it promotes freedom, including the sensitivity that people have about how their actions might constrain the freedom of others.
The author hopes this book contributes to a deeper understanding of the meaning of freedom and strengthens the democratic debate over what kind of economic, political, and social system will contribute to the freedom of the most citizens.
Introduction
Freedom in Danger
Freedom is in danger as the number of people living in free and democratic societies worldwide has declined. Freedom House reports that there have been sixteen consecutive years of declining freedoms, with 80% of the world's population living in countries described as authoritarian or only partially free. The European Union, committed to democracy and human rights, has not been spared, with Hungary governed by Viktor Orbán who supports "illiberal democracy" and opposes a free press and independence in education. Donald Trump, despite multiple indictments and civil suits, remains a strong candidate for the presidency.
We are in a global, intellectual, and political war to protect and preserve freedom. Democracies and free societies can provide for their citizens more effectively than authoritarian regimes. However, in several key areas, particularly in economics, our free societies are failing. This is partly because the Right's incorrect conception of freedom has led us down the wrong path. There are other paths that deliver more goods and services, with more security, but also provide more freedom for more people.
The book approaches the questions of freedom from the perspective of economists, focusing on economic freedom rather than political freedoms. It emphasizes the importance of recognizing our interdependence in modern, urban, and industrial societies, where one person's freedom can often amount to another's unfreedom. Well-designed government actions, including regulations that restrain behavior, can be fundamentally liberating for a large proportion of the population.
The concept of freedom is complex and multifaceted, as illustrated by the United States' history of freedom. The founding of the country was an act of freedom, wresting political control from British overlords thousands of miles away. The first ten amendments to the Constitution, the Bill of Rights, ensure that the state will not encroach on individuals' fundamental freedoms. However, recent years have shown that some freedom for some, but the antithesis of freedom for enslaved peoples, and outright genocide for indigenous peoples.
The American revolution was less about freedom than who exercised political power, with Britain eventually abolishing slavery in 1833. Ronald Reagan supported efforts to undermine democratic freedoms of others, including military coups in Greece and Chile. The January 6, 2021, insurrection was an attack on the peaceful transition of power, and many participants claimed to be defending freedom.
The central message of this book is that the concept of "freedom" is more complex than suggested by the Right's simplistic use of the word. Reflecting on the meaning of freedom makes us think more deeply about many key aspects of society, such as the kinds of contracts that should be enforced and the meaning of tolerance and its boundaries.
The book is divided into three parts: traditional economist's lens, modern behavioral economics, and the third part to help us understand what makes for a good society and what kinds of government and international architecture are most likely to deliver it.
Economic freedom is a concept that emphasizes the freedom to act and choose one's actions. This perspective differs from Milton Friedman's view, which focuses on the ability to spend one's income as desired. The author critiques this perspective, arguing that there is little moral primacy given to people's market incomes and thus little moral reason not to tax those incomes.
People with limited incomes have extremely limited freedom, as their time and energy go into earning enough money to pay for necessities like groceries, shelter, and transportation to jobs. A good society would address these deprivations and reduce the freedom of people with low incomes. People in the poorest countries often emphasize economic rights, such as medical care, housing, education, and freedom from hunger. They are concerned about the loss of freedom from oppressive governments and economic, social, and political systems that have left large portions of the population destitute.
The author argues that governments have unnecessarily restricted freedom through taxation, which constrains the budgets of the rich and reduces their freedom. However, progressive taxation, with proceeds redistributed to the less well-off through social programs or education, expands the opportunity set of the poor while simultaneously constraining the opportunity set of the rich.
In discussing freedom, there are often trade-offs. For example, the right to kill is subjugated to "the right not to be killed," and the perils of spreading a dangerous disease far outweigh the inconvenience or loss of freedom.
