Columbia University economics professor Joseph E. Stiglitz has recently published a book titled The Road to Freedom: Economics and the Good Society. In it, Stiglitz, who shared the 2001 Nobel Prize in economics with George Akerlof and Michael Spence, criticizes what he calls “neoliberalism” and singles out Milton Friedman and Friedrich Hayek as two prominent neoliberals.
Stiglitz argues that Friedman, Hayek, and others failed to recognize the importance of market failure and were too optimistic about how competitive an economy would be without government intervention. Whereas Friedman argued that economic freedom is a necessary, though not sufficient, condition for political freedom, Stiglitz turns the argument on its head. In his view, the kind of economic freedom that Friedman advocated would lead to less political freedom. Interestingly, though, Stiglitz himself advocates less freedom of speech for people with certain views and he claims that it was good for governments to have suppressed what he thinks of as misleading speech about the COVID-19 pandemic and masks.
Throughout the book, Stiglitz makes strong assertions with little or no evidence. Although the book is heavily footnoted, the footnotes are mainly to explain some of his ideas further or to reference other books or articles, disproportionately written by Stiglitz. There are few hard numbers, and he makes little attempt to cite writings by those he criticizes. He also shows a stunning ignorance of economic history and, in discussing price gouging, shows no awareness of the downside of price controls. His criticism of communism doesn’t even mention the millions of deaths it led to. At times, as when he discusses climate change, he is completely one-sided and seems completely unaware that he is. Moreover, Stiglitz is not shy about engaging in stunning personal attacks on Friedman and Hayek. The result is a book that preaches only to people who (1) already agree with him and (2) don’t need to see good evidence or arguments to support their views.
There are the opening 3 paragraphs of my review of Joseph Stiglitz’s The Road to Freedom: Economics and the Good Society. It’s David R. Henderson, “The Wrong Road to Freedom,” Econlib, October 7, 2024.
Another excerpt:
Similarly, Stiglitz refers to people on the “Right” (he capitalizes the word) as advocates of “trickle-down economics.” They argue, he says, that “if we made the economic pie larger, all would eventually be better off.” (italics in original) Yet, I’ve never been able to find people on the “Right,” whether classical liberal, conservative, or libertarian, using the term “trickle-down economics” to refer to what they believe in. When someone uses terms to describe people’s beliefs, terms that those people never use to describe their own beliefs, we should be suspicious.
While we’re discussing it, though, it’s important to point out that the last two centuries of economic growth completely justify the idea that steady economic growth in a society does make virtually everyone better off. J. Bradford DeLong, an economist at the University of California, Berkeley—and certainly no one whom Stiglitz would regard as a “neoliberal”—beautifully documented that fact in a 2000 National Bureau of Economic Research study aptly titled “Cornucopia: The Pace of Economic Growth in the Twentieth Century.” This isn’t trickle-down economics; it’s gush-down economics.
Stiglitz surprised me by advocating laws against “price gouging.” He doesn’t bother addressing economists’ arguments against such laws.
Also, he’s unaware of the evidence on how the “trusts” in the 19th century brought down prices and made consumers better off.
And, ominously, Stiglitz argues for censoring people whose views on COVID differ from his own. Here’s a quote from his book:
When individuals believe wrong information—when there is a demonstrable inability of many to identify laws and false information—there may have to be restrictions on its dissemination. We did that during the pandemic; it would have been foolish—socially harmful—if we had not.
Read the whole review.
Stiglitz- if none questioned govt authority, then utopian bliss shall be bestowed upon all.
David, Joe's antagonism to Friedman goes back to 1970. My first wife's parent were very close to his parents, Nat and Charlotte, in Gary In. They were FDR Dems and advocated for big gov. This was not lost on Joe. When I mentioned I was enrolling at U of C, he dismissed me as something of an idiot for attending there. I suspect his distrust of markets to self correct and big gov advocacy comes from believing only smart people like him in government are better at fixing market failures then the markets themselves. Joe is an example of Hayek's "Fatal Conceit" and pretense of knowledge. Apologies for the rant.