Povertarianism and the mistaken classification of Joseph Stiglitz

Catchy, media-friendly expressions are par for the course in our shallow intellectual climate. “Povertarianism’ is one such soon-to-be-trendy term. The freshly-minted ‘ism’ was coined by Indian Express editor Shekhar Gupta in a recent editorialas a perforative term for what Gupta dubs as the ‘socialist’ and ‘welfarist’ worldview of the UPA government.

“Povertarianism is a unique philosophy invented by the Congress and three generations of its intellectual fellow-travellers. The central postulate of povertarianism is, poverty is my birthright, and I shall do anything possible to make sure you have it,” writes Gupta. The implication is, of course, that an economic policy focused on poverty and which includes interventionist programmes is anti-capitalist, and therefore by definition, anti-poor.

There is nothing wrong with a grand new term, and given the current political climate, don’t be surprised if copycat intellectuals start giving it wide currency in coming days. What rankles, however, is Gupta’s insistence on dragging the name of Nobel Prize-winner Joseph Stiglitz into the picture, as one of the two ideological gurus of Sonia Gandhi’s anti-capitalist policies:

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“From day one, she leaned on Amartya Sen and Joseph Stiglitz (who was just emerging and, in the words of his academic critic Jagdish Bhagwati, using his Nobel Prize as a weapon of mass destruction). She did not need to check out any contrary view. She did not need to, because she shared their fundamental worldview, or one’s scepticism of trickle-down and the other’s discontents with globalisation.”

[caption id=“attachment_986855” align=“alignleft” width=“380”]  Joseph E Stiglitz. Reuters[/caption]

By the end of the op-ed, Stiglitz has been fused fully with both Sen and the UPA in one catch-all term: “the Sen-Dreze-Stiglitz povertarianism.”

The sweeping argument that takes on so many big names at one go would be impressive except that it is based on a fundamental misrepresentation - or ignorance - of Stiglitz’s ideas.

The creator of the term ‘povertarianism’ is instead parroting the ill-informed canards spread by home-bred ’experts’ in economics, who dismiss Stiglitz as a Leftist-Socialist thinker out to demolish capitalism.

A better sense of what Stiglitz stands for, and what policies he defends, it may be wiser to look at what he’s actually said and done.

Joseph Stiglitz has been called the ultimate ‘insider-outsider’ among the authorities on the philosophical-practical framework of capitalism. According to him, the current model of capitalism, dictated by American interests and executed by organizations such as International Monetary Fund and World Bank, is deeply flawed.

It has turned capitalism, which is inherently democratic and democratizing, into an instrument to promote the interests of an influential few. ‘Trickle-down economics was never much more than a belief, an article of faith,’ he says in Globalization and Its Discontents. “In Latin America, growth has not been accompanied by a reduction in inequality, or even a reduction in poverty. In some cases, poverty has actually increased.”

The single-minded emphasis on growth has led to structural imbalances in the economy and growing inequalities in several countries and created the threat of social destabilisation.

“In the boom years before the financial crisis of 2008, the top one percent seized more than 68 percent of of the gain in national income. And while GDP grew, most citizens saw their standards of living erode,” he writes in The Price of Inequality.

However, his rejection of trickle-down economics is in no way a rejection of capitalism; his is a reformist perspective. Nowhere does he advocate the case of socialism; nowhere does he denounce the processes of globalisation, privatisation and liberalization. He maintains that high levels of inequality are not sustainable in a capitalist society. He stresses improving education and healthcare for the poor as it serves the purpose of capitalism better; and he says the distributive aspects of the economy are as important as growth.

The current model of capitalism is not delivering the results the way it was intended to. The one-size-fits-all approach to the economic problems of the poorer countries adopted by international institutions is unwise and sometimes counterproductive. He emphasises that countries which have been smart enough to control the process of globalisation and adapt it to their conditions have prospered without making a lopsided tradeoff between growth and inequality.

Is he anti-globalisation, as Gupta claims? In Making Globalization Work, he tries to prove how globalization, properly managed, as it was in the successful development of much of East Asia, can do a great deal to benefit both the developing and the developed countries of the world. Here is what he wrote in Globalisation and its Discontents:

“…Globalisation has helped hundreds of millions of people attain higher standards of living, beyond what they, or most economists, thought imaginable but a short while ago. The globalization of the economy has benefitted countries the took advantage of it by seeking new markets for their exports and by welcoming foreign investment. Even so, the countries that have benefited the most have been those that took charge of their own destiny and recognised the role that government can play in development rather than relying on the notion of self-regulated market that would fix its own problems.”

Is he anti-privatisation?

“…Privatization without the necessary institutional infrastructure in the transition countries led to asset stripping rather than wealth creation… By contrast, privatisation accompanied by regulation, corporate restructuring, and strong corporate governance has led to high growth.”

None of Stiglitz’s writings can be even remotely read as anti-capitalism - except by the most biased reader. Stiglitz argues instead that governments which managed capitalism with sagacity - without falling into the strait-jacketed approach of the international organisations - have prospered, and with greater equality.

Advocating reforms in the present model of capitalism does not make Stiglitz or anyone who supports his ideas a dyed-in-the-wool socialist, welfarist or povertarian. Before we start coining catchy slogans, let’s all please read some more Stiglitz.