The Occupy Wall Street protests and others around the world have brought to the fore the failures of the existing economic and political systems, Nobel Laureate Joseph Stiglitz said here on Saturday, expressing the hope that in turn new policies will be framed in both the developed and developing countries.
“The protest movements are not the place, where people come to debate or legislate particular remedies, that is a political process. But what they have done is bring to the fore the failures — the failures of the market, the injustices of our systems, the failures of our political systems,” Professor Stiglitz said at a public lecture organised by the Institute of Development Studies Kolkata on “Occupy Wall Street Movement and the Future of the World Economy.”
He said that the crisis had shown the failure of corporate governance, exposed that not only the economic system failed, but also the way the system had worked was unjust and that the political system, even in democratic countries had not been able to prevent this.
The protest movements have already begun to shape our thinking about the problems of inequality, he said, adding that he hoped that from these discussions a new set of policies would emerge “that will lead to equitable, more sustainable and more democratic economic growth.”
Professor Stiglitz admitted that he was “surprised” that it had taken “so long” for the protests to break out. The global economic crisis had occurred in 2008, but the protests had only broken out in 2011, he said, reasoning that the delay may have been caused by hope.
“In the beginning there was hope that the democratic political process will correct the injustices and the market failures, but then it became increasingly clear that it was not going to be the case,” he said.
He said beliefs like the “too big to fail” notion, which had escalated the crisis in the banking sector in the United States, were not addressed.
“What happened after the crisis was that the big banks got even bigger. It was the big banks that got all the money from the government. Over 300 smaller banks went into bankruptcy, but Citibank and Bank of America got tens of millions of dollars from the government,” he said.
Professor Stiglitz pointed out that in democracies, the concept of “one person-one vote” was increasingly being skewed into “one dollar-one vote.”
The disproportionate influence of money in politics ensured that the banks managed to get the deregulation in the 1990s, massive bailouts in 2008 and then prevented effective re-regulation in the aftermath of the crisis, he added.