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Published online by Cambridge University Press: 29 August 2018
In their new indictments of global neoliberalism and the economic profession's culpability in its harms, Dani Rodrik and Joseph Stiglitz press the case for reconstructed globalization that generates benefits for all and not just for corporate and financial elites. Both books are deeply consistent with the insights of Karl Polanyi, who had identified the inherent contradictions of the project to create what he called a self-regulating economy. Like Polanyi, Rodrik and Stiglitz are attentive to the inadequacies of neoliberalism, and both emphasize the capture of the state and international economic policy by elites, who have turned their backs on those left behind. While Stiglitz emphasizes that the profession knows how to fix the problem by applying modern Keynesian insights, Rodrik emphasizes the inherent epistemic limitations facing economists. Indeed, his arguments about development policy reflect the insights of Friedrich Hayek into the limits of economic expertise.
1 Hayek, Friedrich, Law, Legislation and Liberty, Volume 1: Rules and Order (Chicago: University of Chicago Press, 1973)Google Scholar.
2 Smith, Adam, The Theory of Moral Sentiments (Oxford: Clarenden Press, 1976 reprint edition), pp. 233–34Google Scholar.
3 Stiglitz wrote a Foreword to the 2001 reissue of The Great Transformation that applies its insights to contemporary events.
4 Peter Murrell documents the extent of the consensus in his examination of the 1994 collection of essays The Transition in Eastern Europe, edited by Olivier Jean Blanchard, Kenneth A. Froot, and Jeffrey D. Sachs. See Murrell, Peter, “The Transition According to Cambridge, Mass.,” Journal of Economic Literature 33, no. 1 (1995), pp. 164–78Google Scholar.
5 See Independent Evaluation Office (IEO), IMF Performance in the Run-Up to the Financial and Economic Crisis: IMF Surveillance in 2004–2007 (Washington, D.C.: IEO of the International Monetary Fund, 2011)Google Scholar, www.ieo-imf.org/ieo/files/completedevaluations/Crisis-%20Main%20Report%20(without%20Moises%20Signature).pdf.
6 DeMartino, George F., Global Economy, Global Justice: Theoretical Objections and Policy Alternatives to Neoliberalism (Abingdon, U.K.: Routledge, 2000)Google Scholar.
7 Stiglitz's book comprises the original text, along with four new introductory chapters and an Afterword that summarize the original volume's principal themes, explore changes in the economic and political landscape since its initial publication in 2002, and examine the grievances of what he terms globalization's new discontents: the disaffected in the advanced economies. Here I focus on the new chapters of the book. Rodrik's book is compiled almost exclusively from his blog posts on Project Syndicate between 2010 and 2017. This might have made for an uneven monograph. And yet the blog posts have been carefully curated and woven together into surprisingly coherent chapters and a unified book. Both books—especially Rodrik's—examine far too many themes to explore here. Both are wonderfully engaging and would make for effective teaching texts.
8 Stuckler, David, King, Lawrence, and McKee, Martin, “Mass Privatisation and the Post-Communist Mortality Crisis: A Cross-National Analysis,” Lancet 373, no. 9661 (2009), pp. 399–407CrossRefGoogle ScholarPubMed.
9 The form that globalization took also eroded policy autonomy, sovereignty, and state capacity, which for Rodrik in particular is perhaps its most damaging effect across the EMDEs. On this, see DeMartino, George and Grabel, Ilene, “Globalization, Regionalism and State Capacity in Developing Countries: A Note,” in Arestis, Philip, Baddeley, Michelle, and McCombie, John S. L., eds., Globalization, Regionalism and Economic Activity (Northampton, Mass.: Edward Elgar, 2003), pp. 266–73Google Scholar.
10 See DeMartino, George F., ed., The Economist's Oath: On the Need for and Content of Professional Economic Ethics (New York: Oxford University Press, 2011)CrossRefGoogle Scholar.
11 As Rodrik puts it, “In truth, we don't have ‘interests’. We have ideas about what our interests are” (p. 163, emphasis in original).
12 George F. DeMartino, “The Specter of Irreparable Ignorance in Economics: An Introduction to the Issues,” unpublished paper (2018) available at www.GeorgeDeMartino.com.
13 Krugman and Sachs come to mind. After years of beating the drum for central facets of global neoliberalism, both now advocate reforms that take better care of those harmed by the neoliberal project. In the 1980s and 1990s Sachs epitomized Smith's “man of system,” advocating radical economic restructuring across the Global South and in the former socialist countries. Krugman derided the advocates of fair trade for well over a decade—claiming they were both ignorant of economic principles and deceitful—before quietly switching over to the fair-trade camp in 2007.
14 See Hayek, Friedrich A., The Road to Serfdom: Texts and Documents, ed. Caldwell, Bruce (Chicago: University of Chicago Press, 2007), ch. 15CrossRefGoogle Scholar.
15 Grabel, Ilene, When Things Don't Fall Apart: Global Financial Governance and Developmental Finance in an Age of Productive Incoherence (Cambridge, Mass.: MIT Press, 2018)Google Scholar.
16 Ibid., ch. 2; and Hirschman, Albert O., “The Rise and Decline of Development Economics,” in Hirschman, Albert O., The Essential Hirschman, ed. Adelman, Jeremy (Princeton, N.J.: Princeton University Press, 2013), pp. 49–73Google Scholar.
