Columbia Prof Discusses The Battle Against Entrenched Power
Nobel laureate in economics Joseph E. Stiglitz recently published an article on Columbia Business School’s blog that swiftly debunked the widely held perception that our economic system fosters “healthy” competition.
In the article, Stiglitz references a quote by 20th century economist Joseph Schumpeter, in which Schumpeter affirms the natural ability for Adam Smith & co.’s competitive model to snuff out gestating monopolies. But Stiglitz argues that when one stops to really ponder “the large bonuses paid to banks’ CEOs as they led the economy to the brink of collapse,” it’s clear that the yardstick of liberalism can’t properly evaluate the power market economies have to shape “government policies and existing inequalities.”
Stiglitz posits that so-called “competition” among the pharma, tech, agriculture, and communications companies that dominate our national economy isn’t the good-natured may-the-best-multinational-Panama-Papered conglomerate win” fun-run embedded in the DNA of the American dream. “Today’s markets are characterized by the persistence of high monopoly profits,” writes Stiglitz.
Rather it’s a discouraging “oligopolistic” game in which the GDP is dominated by a select few, largely on the backs of oppressed groups – women, descendants of slaves, and indigenous people. The “power” this “game” generates –- political and financial capital –is then wielded “to assert authority over workers in labor markets.”
A study initiated by Obama’s Council of Economic Advisers shows that the “market concentration” of “the top ten banks” jumped from 20 to 50 percent between 1980 and 2010, due to a cross-section of insidious government lobbying, crafty legal maneuvering, and technological advances.
This jump illustrates “inequality rising at every level, not only across individuals, but also across firms.”
Stiglitz summarizes it nicely: “The battle against entrenched power is not only a battle for democracy; it is also a battle for efficiency and shared prosperity.”
About the Author
Jonathan Pfeffer
Jonathan Pfeffer joined the Clear Admit and MetroMBA teams in 2015 after spending several years as an arts/culture writer, editor, and radio producer. In addition to his role as contributing writer at MetroMBA and contributing editor at Clear Admit, he is co-founder and lead producer of the Clear Admit MBA Admissions Podcast. He holds a BA in Film/Video, Ethnomusicology, and Media Studies from Oberlin College.
