Ex-World Bank chief economist exposes “failure” of austerity, deregulation

Nafeez Ahmed 

 

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Joseph Stiglitz, a senior OECD expert, slams OECD’s own policies to prevent global slowdown. 

In a little-known speech at the United Nations University, renowned Nobel Prize-winning economist Joseph Stiglitz criticised Western approaches to addressing the global economic crisis for being obsessed with market solutions that cannot work.

His remarks were made just two months before the Organisation for Economic Cooperation and Development (OECD) issued its latest forecast of a “deeply concerning” slowdown in global trade, which the group says has dropped perilously close to levels “associated with global recession.”

The OECD’s chief economist, Catherine Mann, said that: “Policy actions are already being implemented that will help to address the weak underlying trends.”

Professor Stiglitz of Columbia University, who chairs the High-Level Expert Group on the Measurement of Economic Performance and Social Progress (HLEG) at the OECD, contradicted this reassuring promise in his UN University address in September.

Describing standard neoclassical and behavioural models of economics as “wrong” on the basis of new advances in economic research, Stiglitz blamed ongoing economic stagnation on the so-called “Washington Consensus” — a set of neoliberal policies advocated most strongly by the US and Britain.

The Washington Consensus (WC) consists of a string of interlinked policies requiring reductions in public spending; rampant deregulation to reduce restrictions on banks, corporations and other financial actors; extensive privatisation of social and public services; and liberalisation based on reducing taxes, tariffs and non-tarrif barriers to trade.

All this is believed to drive growth and enhance the distribution of wealth.

In reality, as Stiglitz told an audience at the UN University’s World Institute for Development Economics Research, it has done the opposite. 

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