There are two questions that really matter. What has caused the rise in inequality? And what can we do about it? Stiglitz attempted to answer these questions. He did not think inequality had risen because of what he called normal market forces in capitalism, as Piketty has argued. If you exclude housing wealth, then the income on productive capital has been falling, so labour income should have risen, but it hasn’t.
No, he thought the main reason was ‘structural’. What happened was that in the early 1980s, under Reagan and Thatcher, neoliberal policies were introduced to cut taxes for the rich and relax regulations on finance and monopolies. This was supposed to boost growth and incomes for the rich and this would ‘trickle down’ to the rest. Stiglitz said this policy approach had miserably failed: growth was slower, inequality worse and average household income stagnated. The financial sector did not lend funds to invest productively, but to speculate. So the problem is not capitalism or the market generating inequality, but the changing of the rules of the market: namely ending regulation, progressive taxation and public services in a ‘mixed economy’. But Stiglitz did not say why the rules of the game were changed in the 1980s – it just happened because of ideology, greed, errors…? He did not say. Marxists like me would say the policies were changed because the Golden Age of capitalism with its decent pensions, public services and benefits and full employment could no longer be afforded by market capitalism as profitability of capital plunged. The change of rules was necessary for the saving of the capitalist market system. Extreme inequality of wealth and income is the norm for capitalism: it was the short Golden Age after 1945 that was special, not the neoliberal period since the 1970s, as Piketty has shown. full: https://thenextrecession.wordpress.com/2016/03/02/changing-the-rules-or-changing-the-game/ _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
