comments (Fall 2009)

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Feeble Critiques: Capitalism’s Petty Detractors

Jagdish Bhagwati

W hen the twin crises erupted on Wall Street and Main Street, each one of them fierce in itself but far more frightening when they interacted, populists rushed forward to celebrate the demise of capitalism and, for added gratification, plunge their pitchforks into its dead corpse. Since then, they have had their champagne parties. By now, however, the fizz is gone and the rush to judgment by capitalism’s obituarists has left us with tattered myths and egregious fallacies that invite scrutiny and refutation . . .

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So... Your solution is to reinvigorate a myth? To stoke belief in a social mobility that you concede is imaginary? And to get the absurdly rich to really tone down their public displays of wealth? Do I have it right? Also: It's a curious distinction that you draw between "ideology" and "lobbying for profit." Private profit is the ideology.

Posted by brendan | October 12, 2009 09:16:04 AM EDT

Bhagwati says "The financial sector corrupts morality in the same sense that the existence of an escort service corrupted Eliot Spitzer." Correct. The current US economy is as rotten as prostitution. And that's Stiglitz's point.

Posted by Peter Brawley | October 12, 2009 09:17:25 AM EDT

It seems that Jagdish is ignoring a lot of work on the history and philosophy of economics. He'd really benefit from a good reading of Polanyi's "The Great Transformation." For instance, he side-steps the Maddof issue by just saying "Madoff was almost certainly depraved to begin with" This of course ignores almost everything that we know about how ponzi-schemes work, namely that no one actually goes in thinking that they'll start one (including the most famous schemes), but start committing fraud after losing their investor's money and not wanting to admit this. That is a behavior caused by the economic context the person was raised and exists in. We are all embedded in the capitalist, market-based system, and it's effect on our behavior has to be acknowledged.

Posted by ben spigel | October 12, 2009 12:07:38 PM EDT

A feeble critic of capitalism and it's vagaries. Another believer in the-markets-will-correct -itself philosophy. That the fault is neither with the markets nor with the idea of capitalism but with people. All we have to do is "spent it not on them(our)selves but on promoting social good" When one has exhausted one's rational arguments she starts spewing such mystique babble that deep down man is good at heart.

Posted by Sriram Iyer | October 12, 2009 12:16:06 PM EDT

Mr. Bhagwati's comments are refreshingly balanced and free from agenda-fueled nonsense. Capitalism is no more dead than it was before. Governments and markets must always find an appropriate balance, one which responds to legitimate needs of the market, citizens, and market participants... not ideology.

Posted by Jon Monroe | October 12, 2009 03:13:16 PM EDT

The winners in this now global game of capitalism will never stop - and Prof. Bhagwati is one of them. Society is being pushed in the direction of being amoral - the only thing that matters is the law. There was nothing in the British law against exploiting the colonies, and there is very little in the western law today against polluting Chinese and Indian cities for the sake of cheap goods for the rest of the world. Why did the banks and bankers take public money ? After all, the professor's advice to the losers in the game is to continue believing in success. I guess this advice applies only to some losers - those who are used to losing most of the time. Bankers and hedge fund managers are usual winners, and we cannot let them waste their time and enormous talents on things like introspection which might do them a bit of good. Does Prof. Bhagwati genuinely believe that the prosperity seen today in some parts of the world are sustainable for the future ?

Posted by A Varghese | October 16, 2009 12:53:48 PM EDT

Most Americans support capitalism. They can understand no other way of orgnaizing the economy. Capitalism will destroy itself.

Posted by steve | October 18, 2009 08:01:18 PM EDT

You are right again Jagdish. Even Paul Krugman agreed in his Oct 19 2009 NYT column that when the banks succeed the CEOs pocket the proceeds and when they fail the taxpayers foot the bill. Hence he implied that government bailing out is a no-no and therefore reforms must be made. But I think the simplest and the most effective reform is no more bail-outs whatsoever. Yes, let the market be the executor, jury, and judge!

Posted by Chee Heong Quah | October 19, 2009 02:35:41 AM EDT

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