Recognising "Renegage Economics"?
October 10, 2001 2:43 PM   Subscribe

Recognising "Renegage Economics"? Joseph Stiglitz, who was famously cast into the wilderness by the IMF and World Bank, walked off with a share of this year's Nobel Prize for Economics, for his work on the asymmetric benefits of unrestricted "open markets": in short, the way that promoting "free trade" favours the developed nations over the developing. A calculated fuck-you to the neo-liberal mainstream, or a recognition that the critique of globalisation extends well beyond street protesters?
posted by holgate (8 comments total)
That's fascinating. But according to the article, "the Nobel award has only a tangential relationship to his work on development." He shared the award with two others for their work on markets in which sellers have an advantage over buyers - the market for used cars, for example.

I'm definitely going to read more about this guy's work, though. I'm a committed capitalist, but I'd love to read a critique by a serious economist.
posted by lbergstr at 3:24 PM on October 10, 2001

From the Nobel press release:

"Stiglitz is also one of the founders of modern development economics. He has shown that asymmetric information and economic incentives are not merely academic abstractions, but highly concrete phenomena with far-reaching explanatory value in the analysis of institutions and market conditions in developing economies."

Not so "tangential" by the sounds of that. I think The Financial Times was putting a gentle capitalist spin on the news.
posted by liam at 3:41 PM on October 10, 2001

Henry Kissinger won the Nobel Peace Prize too...but thanks for the link, I had never heard of Mr. Stiglitz.

FWIW the IMF and the World Bank are more bungling bureaucrats than hard nosed capitalists, though. E.g, the Wall St. Journal editorial page has decried their stupidity and actual lack of solid economic policies on numerous occasions.
posted by quercus at 6:20 PM on October 10, 2001

in short, the way that promoting "free trade" favours the developed nations over the developing.

This is patently untrue. The work for which Stiglitz was honored puts market imperfections in economic models so that they better describe what's going on. Explaining unemployment, for instance, is impossible without some imperfection keeping the job market from doing its job. Your synopsis is completely besides the point.

Stiglitz was on the short list for this price for years, simply because he is a brilliant scientist. His recent comments about the IMF have nothing to do with it.
posted by thijsk at 12:43 AM on October 11, 2001

I have been studying economics for a few years and while I'm no expert, I've never seen any game theoretic economic paper that even tries to argue for the way things 'should be'. They barely get close to the way things are and they back off. The Lemon Market paper, which I have around here somewhere (rustle, rustle, rustle), gets closer than most, thus it's brilliance. But I fail to see any normative 'fuck you' anywhere in his work or the ideas of asymmetric information.
posted by dness2 at 1:15 AM on October 11, 2001

thijsk: I suppose you would also have us believe that Einstein's Nobel was really for the photo-electric effect, like the committee said at that time, and the then recent confirmation of relativity had nothing to do with it.

Various Nobel committees over the years have tweaked the noses of pompous institutions by rewarding their critics, even if the specific works cited are not the controversial ones. It strains credulity to believe they are not doing it again.
posted by anewc2 at 11:15 AM on October 11, 2001

thijsk: bzzt. The application of Stiglitz's mathematical models of asymmetry provide a explanation of why market deregulation doesn't give developing nations the economic benefits that are preached to them by bastions of neo-liberalism such as the WTO. This is not just because developed nations already have the infrastructure and economies of scale to exploit the margins in the production chain, but also because they have inside knowledge of how global markets work. They have both a structural and an "informational advantage".
posted by holgate at 12:57 PM on October 11, 2001

Economics of information: `how both parties know exactly how markets work but have different information about the traded good'.

That's what the price is for. It has nothing to do with global political issues.

As far as Stiglitz being renegade, it appears to me that questioning the wisdom of the IMF/World Bank is something that all good scientists, looking for truth rather than favors, should do every once in a while. But to claim that this is why he got the price does not do him justice. At all.
posted by thijsk at 1:34 AM on October 15, 2001

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