Yet another victim of the Covid: capitalism

This is an article by World Review: The State of Democracy, a special section that examines politics and world affairs, and is published in conjunction with the annual Athens Forum on Democracy.


The coronavirus pandemic has exacerbated the gap between the haves and have-nots and questioned capitalism: this is the conclusion reached by Joseph Stiglitz and Hervé Berville, two economists who spoke at the Democracy Forum this year’s Athens event, an annual event organized in association with The New York Times.

Professor Stiglitz – winner of the 2001 Nobel Memorial Prize in Economics, former chief economist at the World Bank and professor at Columbia University – said in a pre-conference interview that the private sector had proved incapable of respond to global health alone. challenge and that the government had a big role to play.

Mr Berville – a French MP from President Emmanuel Macron’s centrist party and author of a 2018 report on reforming French aid policy – said in a separate conversation that rich countries had spent billions on them- same and does little to help countries that need it most.

The following interviews have been edited and condensed.

Professor Stiglitz, do you think the pandemic will pave the way for a more socially conscious capitalism?

Yes, absolutely, and for several reasons. We saw that, like during the 2008 financial crisis, the markets were not as “good” as we thought. They were not resistant. They couldn’t make face masks, protective gear, complicated products like that. We have had disruptions on the supply side.

The image that markets can solve all problems has really been shaken. We recognize that at this time of crisis, we look to government to help us tackle macroeconomics and vulnerabilities, but also to protect us in terms of public health. And we’re not going to look to the private sector the next time we have a pandemic. What we really need is a stronger public sector.

How has capitalism as a system and a way of life come into question?

The pandemic has exposed part of the crudeness of our capitalism: inequalities. He showed the strength of the private sector in being able to produce vaccines so quickly, but also its weakness. They still cannot produce enough vaccines to protect the rest of the world, and we are going to be hit by another wave, potentially coming from a developing country where the disease has not been controlled.

You point out in your books and speeches that markets pay no attention to social justice and income distribution. Yet capitalism is built on the notion of free markets. How are we going to change things?

Through politics and a change in societal norms. Let me give you some examples. This type of awareness has led the vast majority of people to the Business Roundtable [an association of chief executives of leading U.S. companies] support the transition from shareholder capitalism to shareholder capitalism. Even though not everyone really thinks it deep in their hearts, this change in the way they think about it will have effects over time.

I have attended meetings where a CEO of a large company said: “I did not realize how badly we paid our workers, that a large part of our workers did not get a living wage. . And when I recognized it, I changed it. His conscience, previously, minimized his labor costs. And his consciousness is now much more: what kind of business do we want to have?

What kind of measures should governments introduce?

The first obligation is to ensure that all who are able and willing to have a job can get a job. This is our first failure, and we need to fix it.

Over the next 30 years, we have a tremendous amount of work to do to make the green transition, to make sure everyone has a proper education, to have decent infrastructure and so on.

What about a universal basic income?

Considering all the other things we need to do, I think we still need to focus our spending, our support payments, on those who can’t work and are most in need. If we had more money, it would be different, but for now, I don’t see that. We have so many other needs.

How has the pandemic widened the divide between Western and emerging economies?

It has exposed the prevailing inequalities to an absurd degree. We have seen that countries in Europe and North America have been able to accumulate billions and billions in debt and put in place massive stimulus packages. And yet, we have been unable to provide solutions to emerging economies. We had to put a moratorium on their debt and they did not have access to the financial markets, when they were the ones who needed the help the most.

Only 2 percent of the population in these countries are vaccinated, while in European countries we are at 80 percent vaccination rates and are talking about giving a third dose of vaccine.

Today’s capitalist system does not correct imbalances, it reinforces them.

In all fairness, globalization and free markets have reduced global poverty to levels never seen before.

It is true that millions, if not billions, of people have been lifted out of poverty. The question now is how to reduce and even eliminate these remaining pockets of poverty. It is unacceptable that at a time when billionaires have reached unprecedented levels of wealth, there are still people without access to food and basic health care.

It is not enough that goods and services are made available to these countries. They must also be made accessible. Even if a health center does not cost more than one euro, if people cannot come to that health center, there is an inequality of access. We have to work on infrastructure, social and geographic mobility.

How has capitalism contributed to the deep inequalities between the West and the rest of the world?

There has been a major reduction in governments and public services, and pressure for minimum taxation: a race to the bottom. Nations were seen as more economically virtuous and likely to attract multinationals and foreign investment if they imposed lower taxes. We now realize that this was a political and economic error, and that the victims were the poorest populations.

Investment in human capital was insufficient. We also paid too little attention to the impact of what we were doing on natural capital. We assumed that the allocation of financial capital would increase the human and natural capital of a country. There was therefore a chronic underinvestment in training, education, health and the protection of biodiversity – on the part of governments, but also on the part of international institutions.

The mistake in economic development strategies has been to assume that there is only one solution: that the same formula would work in completely different countries.

We cannot respond to common global challenges – issues of education, health, terrorism – without common action involving all countries of the world. We cannot tackle issues like poverty and inequality in our own backyard alone. Just as socialism in one country cannot happen, neither can reformed capitalism in one country.

In 1945, we created the International Monetary Fund. I would like to see the creation of an International Cohesion Fund. We must put the issue of solidarity at the heart of our market economy.


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