From the stage of Teatro Sociale, Joseph Stiglitz, Nobel Laureate in Economics and professor at Columbia University, addressed a sold-out audience during the third day of the Trento Festival of Economics. His intervention, titled “Capitalism in need of reforms”, touched on several sensitive points, ranging from growing inequalities to the environmental crisis. As he stated, “Reforming capitalism is urgent; we are facing multiple crises. Take the climate crisis: Italy is facing this flooding, and in the US, we have had hurricanes and wildfires,.. these are extreme weather events which bear an excessive cost on society. We are also facing a crisis as to inequality, a slowing down of our growth with the benefits going to the people at the top, not to people at the bottom. Capitalism is not working the way it is supposed to be working”.
He then moved on, dealing with how a reformed capitalism could look like, in what he defines “progressive capitalism”: “The basic idea is that in a complex 20th-century economy you need to have decentralization. You need to have for-profit and not-for-profit bodies working together. Progressive capitalism includes a rich variety of actors and involves a stronger role for the state. We now realize, particularly after the pandemic, how important the government is”. The government - he stated - was a key player in financing the research on the vaccine and its dissemination, but also in supporting the economy not to collapse into a depression which could have been worst than the Great Depression. “We also realized that the market has created all the problems I described, but it’s not going to solve it. Progressive capitalism can”.
In his view, the US is an interesting case study since it represents the extreme example of capitalism and the problems it brings about. Europe should not follow in the same footsteps but learn from the US and make different moves to avoid facing the same issues the US is facing. Stability and growth pacts also need reforms since “you cannot achieve the green transition if your hands are tied, and you can’t invest. There are no economic bases. Italy has talked about having a green golden rule, and this seems to me absolutely right”.
Prompted by Donelli, while drawing to a close, Stiglitz underlined once more that politics and economy cannot be separated. “We have to write rules, which normally are written in the political space. The problem is that the political space has been constrained by the neoliberal ideology, which was never a good ideology. We had wrong regulations on governments, limiting their actions, and no regulations on the economy. It didn’t work well. We need to regulate the private sector, give more space to the public sector, and move towards progressive capitalism”.
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