Orwell's Economy

The Price of Inequality, by Joseph E. Stiglitz (W.W. Norton & Company). While reading The Price of Inequality, one seems confronted by a society that was merely imaginative in Jack London’s 1908 dystopian novel The Iron Heel. Rampant poverty, political and economic imbalance, entrenched class divisions, and middle class evaporation, all engendered by an oligarchic agenda enacting a modern-form of W.J. Ghent’s “benevolent feudalism.” Stiglitz tells a similarly grim story of “an increasingly dysfunctional capitalism”, but in this case, it is all reality. Sitglitz shows that in this reality, for the last three decades or so, American society has veered further and further away from James T. Adams’ 1931 definition of the “American Dream” as unfettered opportunities for success and prosperity without consideration of pedigree or social standing. For those of us who yet remain as the monkeys of Toshogu, that see, hear, and speak no evil, Stiglitz reveals compellingly and glaringly that we now exist in some Orwellian Animal Farm, in which we are all equal, but some are more equal than others. This is, for Stiglitz, the real world in which we live and the reality we must have the political will and moral aptitude to confront.

Another book by an economist tackling the issue of inequality, merely describing how people in all stratums of the U.S. economy are living under current macroeconomic behavior is not what Stiglitz endeavors to do. Yes, it is descriptive, without – thank God – being replete with data points, diagrams, and curves and coefficients – but it is not only descriptive. Neither does he waste our time by proclaiming the obvious, that market forces, along with an either apathetic or co-opted government, are perpetuating socio-political and economic inequality. Anyone living from paycheck to paycheck could reach that dour conclusion in less than 400 pages. What Stiglitz painstakingly does is resist the ideas that justify the inevitability, the necessity, and the positive cost-benefit assertions of unreasonably high levels of inequality. He takes issue with the ontology and teleology of our present economic paradigm, in essence declaring, whether we agree with it or not, that “inequality, pollution, unemployment…and the degradation of values” are not the essence of capitalism and “America’s market economy [working] to the advantage of those at the top and to the disadvantage of the rest” is not its final goal. Undoubtedly, such an argument is cast in high moral terms, but Stiglitz does so without being preachy or pretentious; and he does so not just with economic terms or statistics, but with stories – stories of lives he’s seen adversely impacted by inequality as far back as his childhood in Gary, Indiana.

This book seems like it was decades in the making, written persuasively and with the focus of a Matlock, with a mathematics and economics background, methodically tearing down the naive, ahistorical, and duplicitous counterarguments of self-serving interests from every perceivable angle. Whether the rationalization for coarse inequality is that it incentivizes people to work, save, and invest, or that it is the outcome of the link between pay and societal contribution, or that the Roman goddess Fortuna has simply just turned her back on the lower and middle classes, in the form of abstract market forces, Stiglitz meticulously weakens those arguments. He posits three important points worth noting: (1) inequality can be lessened without totally weakening incentives; (2) the private incentives for those at the “top” are “well in excess of their social contribution”; and (3) market forces are not detached from laws and regulations but are in fact “shaped by political processes.” In other words, for Stiglitz, the reasons attempting to justify high inequality are not only tenuous intellectually but counterproductive practically.

It is this dehumanizing inequality that this Nobel Laureate aims to unravel in the simplest terms, as he critically analyzes the widespread inequality infecting the U.S. political and economic landscape. Such inequality, Stiglitz argues, is not “just the forces of nature, of abstract market forces”; it is the result of serious systemic failures – failure of the economic system to be stable and efficient, failure of the political system to correct said economic instability and inefficiency, and the failure to preserve the socio-moral values of equality and fairness. In short, inequality, as it is currently experienced, not only perpetuates socio-political divisiveness but is also detrimental to national economic growth and output. Marxists, socialists, and communists shouldn’t drool over this conclusion because Stiglitz does not throw capitalism out with the bath water. He merely aims to recommend how we can reduce the inequality that an unchecked free-market economy, governmental by-standing, and the social norm of selfish consequentialism produce. But take heart, this book deals a serious blow to Leibniz’s “best of all possible worlds” theory by proclaiming that it is not and we have the power to make it better not just for the 1 percent but for the 99 percent as well.

-S. Emmanuel Epps

Related posts