So says Joseph Stiglitz in an interview with Le Monde.
For Stiglitz, what is happening is not just a crisis of the financial system, but a crisis of wealth deterioration in general. He denounces the hypocrisy of the American financial system which relied on maximum deregulation of financial flows (Appadurai’s financescapes), on the removal of responsibility of economic actors, on the unbalancing of the relationships between public and private sectors. All this led to the impoverishment – rather than the enrichment – of the countries where market fanaticism reigns, as he puts it.
For Stiglitz, there is a need for a system based on different values.
Early in 2008, the Nobel Prize winner was asked by the French government to chair a commission tasked with defining new wealth indicators. A first report should be published in the first trimester of 2009 and it will emphasize the need for sustainable development and growth and the necessity of not overestimating the health of economies.
Among the indicators under consideration (as opposed to the usual GNP), one finds debt sustainability, quality of public services, the state of population sanitation, and environmental sustainability. The idea behind these indicators is not to measure exclusively material goods but also social and environmental welfare. This seems very inspired by triple bottom line considerations (economic profitability, environmental sustainability, and social responsibility).
As Stiglitz indicates, even once the worst of the current crisis is behind us, structural issues will remain, especially the fundamental problem of inequalities, perceived not just as a social problem but also as a problem of dysfunctional economic flows. The way the inequality problem was dealth with over the past years was to allow those at the bottom of the social ladder to borrow more and more. Of course, this was never a sustainable solution (neither sustainable, nor a solution). This model has now completely collapsed and we have no back up economic system. More seriously, for Stiglitz, we do not have a model that would allow the economy to develop truly sustainably.
Big problem, indeed.
For those of you who are fluent in French, the full TV interview is available here.