For 200 years, there have been two schools of thought about what determines the distribution of income – and how the economy functions. One, emanating from Adam Smith and 19th-century liberal economists, focuses on competitive markets. The other, cognisant of how Smith’s brand of liberalism leads to rapid concentration of wealth and income, takes as its starting point unfettered markets’ tendency toward monopoly. It is important to understand both, because our views about government policies and existing inequalities are shaped by which of the two schools of thought one believes provides a better description of reality.…Joe goes "there" and mentions the "p" world. Apparently his Nobel is his sword and also his shield. The post is short and incisive.
The implications of this are profound. Many of the assumptions about market economies are based on acceptance of the competitive model, with marginal returns commensurate with social contributions. This view has led to hesitancy about official intervention: If markets are fundamentally efficient and fair, there is little that even the best of governments could do to improve matters. But if markets are based on exploitation [rent extraction], the rationale for laissez-faire [economic liberalism] disappears. Indeed, in that case, the battle against entrenched power is not only a battle for democracy; it is also a battle for efficiency and shared prosperity.
Right on, bro. Power to the people!
The New Era Of Monopoly Is Here
Joseph Stiglitz | Nobel-prizewinning economist, professor at Columbia University, former senior chief economist of the World Bank and chair of the council of economic advisers under Bill Clinton