La strada per la libertà. L'economia e la società giusta

by Joseph E. Stiglitz, Giovanni Garbellini (translator)

Stiglitz ci mostra le idee neoliberiste per quello che visioni contorte che lacerano il tessuto sociale mentre arricchiscono pochi privilegiati. Vi è un modo piú profondo e umano di considerare la libertà: se vogliamo creare una società in cui tutti possano prosperare dobbiamo ripensare i nostri sistemi economici e normativi e adottare investimenti pubblici nell'istruzione, nella ricerca e nelle infrastrutture.


Gli Stati Uniti sono una nazione nata dal convincimento che il popolo debba essere libero. Ma dalla metà del secolo scorso quest'idea è stata travisata. La destra ha giustificato lo sfruttamento ammantandolo sotto la retorica della libertà: compagnie farmaceutiche che chiedono un prezzo eccessivo per i loro prodotti, compagnie Big Tech svincolate dai controlli, politici padroni di incitare alla rivolta, multinazionali libere di inquinare e cosí via. Come siamo arrivati a questo punto? A quale tipo di libertà dovremmo pensare? Il premio Nobel Joseph E. Stiglitz esamina l'attuale sistema economico americano e l'ideologia politica che lo ha creato, mettendo a nudo i suoi fallimenti. Il mercato "libero" e senza regole ha sfruttato i lavoratori, i consumatori e l'ambiente, foraggiando movimenti populisti che ora pongono una minaccia reale alla vera libertà economica e politica.

Genres: Economics, Nonfiction, Politics, Business, Society, Sociology, History

457 pages, Kindle Edition

First published January 1, 2024

About the author

Joseph Eugene Stiglitz, ForMemRS, FBA, is an American economist and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is also the former Senior Vice President and Chief Economist of the World Bank. He is known for his critical view of the management of globalization, free-market economists (whom he calls "free market fundamentalists") and some international institutions like the International Monetary Fund and the World Bank.

In 2000, Stiglitz founded the Initiative for Policy Dialogue (IPD), a think tank on international development based at Columbia University. Since 2001, he has been a member of the Columbia faculty, and has held the rank of University Professor since 2003. He also chairs the University of Manchester's Brooks World Poverty Institute and is a member of the Pontifical Academy of Social Sciences. Professor Stiglitz is also an honorary professor at Tsinghua University School of Public Policy and Management. Stiglitz is one of the most frequently cited economists in the world.

Reviews

[Matt · Rating 2 out of 5]

I have a lot of mixed feelings about this one. On the one hand, I'm deeply sympathetic with the general idea of "progressive capitalism." And I really like Stiglitz's insistence that we think about freedom in terms of trade-offs. Often, one group's "freedom" is another's "unfreedom."

So it's really too bad that there's just so much silliness in here. Stiglitz takes himself to be arguing against the likes of Milton Friedman and Friedrich Hayek. Which is fine, except, he never actually argues against Milton Friedman and Friedrich Hayek. It's all just one gigantic exercise in strawmanning. In Stiglitz's world, figures on "The Right" have literally nothing useful to say about political or economic matters, and no arguments or evidence to fall back on in support of their views. At one point, he tells a story about a conversation he had with Friedman during a seminar. I'm going from memory here, but the gist of it was something like this:

Milton Friedman: Completely unregulated markets solve all human problems! Automatically! Every time!
Joe Stiglitz: A-hah, but I have discovered something that has clearly never occurred to you - I call it, MARKET FAILURE!
Milton Friedman: (Collapses in a puddle of drool on the floor)

Free market economists, on Stiglitz's view, assume that markets are perfectly efficient. People like Hayek assume that there is perfect information (No really he actually says this). And so all it takes to undermine their view is pointing out that these conditions clearly aren't met in the real world. And one must conclude that people like Friedman and Hayek are either complete blockheads or dishonest shills for the capitalist ruling class.

Then there's the bizarre view of history that runs through this book. In Stiglitz's world, we have been living in an age of "unfettered capitalism" for the past fifty years. And so whatever social or economic pathologies we observe in the world today can clearly be laid on the doorstep of Friedman, Hayek, et al. Never mind the massive expansion of the regulatory and welfare state that has occurred over that timeframe. The solution is obviously more regulation.

As for the idea that such regulation might *itself* be problematic, that there might be legitimate concerns about regulatory capture or regressive redistribution - Stiglitz simply characterizes such views as holding that "government is always inefficient" and dismisses them perfunctorily in the space of a couple of paragraphs. Public choice and the Virginia School of Political Economy? Never heard of em.

There are nuggets of insight to be mined from this book. But it's a long slog for precious little payout. Unless you thrive on bombastic self-righteousness, this probably isn't the book for you.

[Jim Parker · Rating 5 out of 5]

Freedom. Is there a word more abused in today’s climate than that one?

In this new vital and urgent work, Nobel laureate economist Joe Stiglitz shows how the Right has co-opted the concept of ‘freedom’ over the past four decades to build a ruinous form of neoliberal capitalism that threatens both what is left of democracy and the planet itself.

Anyone familiar with the ever increasing encroachment of unfettered ‘free’ markets into every aspect of our lives since the 1980s will find themselves nodding their heads upon reading Stiglitz’s description of how we got to this sorry place.

From the piling up of risk onto the shoulders of individuals as collective power has been eviscerated, to the hollowing out of industrial centres and loss of blue-collar jobs, to the profit-driven privatisation of healthcare and education to the growing monopoly power of rent-seeking corporations, society (a concept that Thatcher said did not exist) has been put into the service of a narrowly defined ‘economy’.

Major political parties of both the centre-left and centre-right have become like Pepsi and Coke - just minor variations on the same theme, with power ultimately held by a small group of ultra-rich individuals dictating policy for their own benefit. The possibility of collective action to reset the scales has been cut off by attacks on unions, gerrymandering of electorates and the control of the media by billionaires who seek to profit from division and polarisation.

The dreary and endless culture wars are used by the Right as bread and circuses to keep the masses in a perpetual state of outrage and divert their attention from the existential threats of climate change, pandemics and another world war. In the meantime, the policy stasis encourages the rise of populists like Trump, Orban, Bolsanaro and Modi who seek to scapegoat minorities and put the blame for the ills of society on those with the least power.

The Road to Serfdom has become The Road to Fascism, Stiglitz writes. The threat to human existence was not, as Hayek warned in the mid-20th century, an ever-expanding state, but an ever-expanding market.

Stiglitz ends the book with a call for ‘progressive capitalism’ built around the creation of a learning society, a decentralised economy, a better balance between corporate and public power, collective action, social democracy and a greater role for the state. While all of these suggestions sound welcome and sensible, one wonders whether the word ‘capitalism’ can be redeemed at this point. Adding the label ‘progressive’ sounds like a contradiction in terms.

The Scandinavian model of social democracy seems a better way to go, but I appreciate that in the US - where market fundamentalism is at its most advanced - junking capitalism completely at this point might be too radical an option.

Whatever the catalyst for change (one senses the climate crisis will spell the end of unsustainable industrial growth) Stiglitz is undoubtedly right that power relations cannot be divorced from economic decision-making and that our democratic institutions have been overrun by a wealthy and powerful few enacting policy at the expense of the many.

History suggests, however, that those with such unfettered power rarely give it up without a fight. In this, at least, Mao got it right.

[Yosra Ali · Rating 3 out of 5]

As the book suggests, it is “essential reading for those committed to the American ideal of an economic and political system that delivers well-being, opportunity, and meaningful freedoms for all.” Maybe not “essential” but not a bad read! The book is a non complex read for people with limited or no prior economic knowledge but are nonetheless interested to start and combine economics with politics and the debates within and across societies. From that perspective, the book clearly and in an organized and non-boring format laid out the problems of neoliberalism, walking the reader through a timeline of America and how neoliberalism and the theories of Milton Friedman led to where the USA and the world are right now. It was described with easily explained economical and political terminologies and examples and consequences that added to the value of the book.
The author is experienced, and it seems that throughout the years, he managed to create his own values and theories and perhaps wrote this book as an obligation to describe his stand on the political/economical views. This was the beginning of the degradation of the book. The book is more of statements and recommended unrealistic direction instead of an interaction and a dive into the challenges of any of the proposed counter arguments to neoliberalism. From the book, I understood where the author stands and what he hopes for the future of societies but it lacked any clear vision on how we would get to a better situation and the challenges that we may face along the way.
The book also discussed most topics with a shallow view, specially, the Corona vaccination debate and the research funding dilemma.
Personally, I didn’t mind reading this book but I don’t know of people I would recommend it to.

[Jane · Rating 4 out of 5]

Stiglitz does a good job explaining how neoliberalism (the belief in unfettered markets) developed support among economists and why it has failed and had such devastating results for society. A great example is, of course, how the greed of the Sacklers led to the opioid crisis. The book also made me realize the impact of Daniel Kahneman’s thinking and the importance of behavioral economics. However, like so many thinkers who are great showing us where we have gone wrong, I felt the last third of the book in which he discusses what kind of economy produces a good, fair and just system was weak. How are we going to get there, if we can’t visualize the kind of society we want? However, the ideas in this book are important and everyone should be thinking about them.

[Doctor Moss · Rating 4 out of 5]

This book is Joseph Stiglitz’s diagnosis and prescription for the failures of neoliberal economics, primarily since its embrace during the Reagan presidency, as evidenced by slowed rates of economic growth and large increases in inequality within the US economy.

Economics for Stiglitz has not been a spectator sport. He has solid theoretical credentials. He’s won a Nobel Prize in Economics. But he has also served as chief of President Clinton’s Council of Economic Advisors and as chief economist for the World Bank.

The title of the book is indicative of its purpose. The Road to Freedom begins with a critique of neoliberal economics and free market theory, particularly as championed by Friedrich Hayek (author of The Road to Serfdom) and Milton Friedman. Stiglitz moves on from there to his own proposal for a new course of economic thinking and policy-making that he calls “progressive capitalism.”

Stiglitz criticizes Hayek and Friedman on two broad fronts. One is their conception of freedom, and the other is their treatment (or dismissal) of the assumptions behind free market economics, going back to Adam Smith’s admonitions about the conditions that must be met for the “invisible hand” of capitalism to do its work.

On “freedom” Stiglitz claims that Hayek and Friedman, I think Friedman in particular on this point, treat freedom in an arbitrarily exclusive manner as individual economic freedom — the freedom to do as you wish with your property, to enjoy it as you wish, to dispose or sell it as you wish, and to acquire more property as your means (other assets) allow. Friedman and Hayek of course do address political freedom as well, but treat, by Stiglitz’s account, political freedom as deriving from economic freedom. “Property” (or “private property” in this context) becomes almost a primitive, with rights, obligations, and political structures built on top of the notion of property.

By contrast, Stiglitz proposes a much broader conception of freedom, often called “opportunity sets” — the broad set of choices available to a person, including pursuing an education, choosing and pursuing a career, marrying, raising children, . . . as well as acquiring, enjoying, and disposing of property. Opportunity sets, by my understanding, are heterogeneous and potentially open-ended, depending on the social institutions and culture in which you live.

Several points fall out of Stiglitz’s differences with Hayek and Friedman on the notion of “freedom.” One is the potential relationship between political freedoms and economic freedoms. By Stiglitz’s account, Friedman especially emphasizes that political freedoms derive from economic freedoms. You cannot have a free society without economic freedoms.

Stiglitz sees the relationship as inherently going both ways. Economic freedoms, and the lack of economic freedoms, can derive from political freedoms, and their absence. In fact, a vicious cycle presents itself, and appears to be at work in our own politics and economy. When concentrated in the hands of some or a few, economic freedoms (and economic power), provide the ability to exercise political power, which in turn influences the distributions of economic freedoms, which then provide greater political power, and so on. We see that cycle at work in campaign funding and other forms of influence from economically advantaged corporations and persons on public policy, legislation, and broader political fronts.

Another, more philosophical point, is that other freedoms that have nothing to do with property or economic behavior can count just as much in the conception of a good life and a good society, and that that conception can fall under the proper reach of public policy and government designed to provide for and protect them — those freedoms I mentioned above, including the freedom to pursue an education, breathe clean air, raise children, etc. Those freedoms are likewise compromised by a scale that tips economic freedoms toward some and not all.

Stiglitz also emphasizes throughout the book potential trade-offs between freedoms, trade-offs that especially gain significance in social contexts, rather than the individualist contexts favored by the neoliberal tradition.

By Stiglitz’s argument, individual freedom is not sacred or absolute. Loss of freedom, or compromises of freedom, for one party may be overbalanced by increases of freedom for others. The compromise or loss can in some cases even be overbalanced with increased freedom for the one compromising or losing freedom in the first place. But the trade-off can be justified in any case. Obvious examples include taxes to fund public education (increasing the freedoms of the workforce) or public infrastructure (increasing the publicly available transportation or communications systems). Constraining polluters increases the freedom of the public to breathe clean air, drink clean water, etc.

A larger point, partly in response to those who do give absolute status to individual freedom, is his claim that one person’s freedom places limits, or diminishes, the freedoms of others. Freedom is inherently social — it is only with blinders on that we regard freedom entirely from one individual’s point of view. My property, my house, my car, etc., excludes others from enjoying those same freedoms. No one else can legally walk into my house, raid my refrigerator, etc. This may seem trivial until you experience scarcity.

Stiglitz clearly treats the “public good” more expansively than his neoliberal opponents do. But we shouldn’t lose sight of the fact that every individual has a stake in the public good, including those who may feel that they are paying too highly for it. Raising the educational levels and the health of the labor force and the population in general, building and maintaining physical infrastructure, . . . — these things provide broad benefits, ones that enable entrepreneurship, innovation, and growth.

That’s one front on which Stiglitz wants to argue against traditional neoliberalism. The other, as I mentioned, is the efficiency (and stability) of the free market economy. “Efficiency” here refers to an economy’s ability to generate growth, innovation, and improvements in the standard of living of those living within it.

We should say for the sake of definition that a “free market” here is an unregulated market, one as untouched by government constraints and other interventions as possible.

Free market economists argue that markets self-correct and by their very nature produce efficiencies — growth, just distributions of wealth, and inherent protections against exploitations and other injustices.

Stiglitz’s arguments against free market economists (again, primarily Friedman and Hayek) are, for the most part, not surprising or novel. Those arguments, primarily that the virtues of free market economics depend on unmet simplifying conditions (perfect information, narrow self-interestedness, competitive environments, perfect rationality, and other factors that would limit coercion and exploitation), have been consistently heard, empirically supported, and ignored at the political and policy level. Stiglitz himself, as chairman of Clinton’s Council of Economic Advisors, bore direct witness, to implementation of neoclassical, free market economics, against the wind of those arguments.

Those assumptions, as Stiglitz says, were known even to Adam Smith. He cites passages from Smith (both from The Wealth of Nations and Smith’s Theory of Moral Sentiments) warning about and discussing how to prevent monopolistic power, exploitation of labor, and other distortions to the workings of free markets. As I said, these points are not new.

What economists refer to as “externalities” distort the “perfect market” in ways that require some sort of action — “government intervention”. Externalities include monopoly power or other less obvious market power (e.g., a large employer’s advantage in setting wages in a small town), luck (natural disasters, etc.), lack of information to one party or another (e.g., deceptive advertising or suppression of information, such as health factors, that would influence buying or selling decisions), political power (e.g., through campaign funding or other means of supporting candidates whose policies will favor one or another party in market interactions), intergenerational wealth or other assets, the specifics of property laws (which can differ widely from place to place even within one country like the US).
.
Free market economists, especially Friedman, do have responses to those problems — arguments that “potential competition” prevents real monopolies from forming, or that prices (including for Friedman, taxes) can do the job of correcting cases of exploitation and free-riding. Stiglitz believes that Friedman’s arsenal is too weak to deal with those problems, relying on “prices” alone.

Looming above the theoretical problems are Stiglitz’s claims that the neoliberal economy, since the Reagan years, has just plain failed to produce the growth of previous decades and has produced a yawning gap in income and wealth distribution. The data does bear him out on this — US GDP growth in the decades prior to the Reagan administration ran between 11.3% and something over 4%. In 2023, it hit 2.5%, and it has rarely exceeded 4% over the last 40 years (World Bank numbers). Meanwhile the income growth of wealthier Americans has far outpaced that of the middle class, not to mention the lower class (see the Pew Research reports, or others, for corroboration). The trends span Democratic and Republican administrations.

But . . . the fact remains that, in American electoral politics, free market policies prevail, and candidates in elections benefit from messages associated with them.

There’s no mystery why the beneficiaries of free markets would favor ignoring their failures — the failures are their gains. And, as Stiglitz has claimed, their economic power builds their political power to perpetuate policies favoring them.

But why do free market arguments have such popular appeal that they sway elections, even getting the votes of those disadvantaged by free market economics? I’m not sure I know.

One factor, of course, is the ability of those with economic (and political) power to influence public thought. That is the topic of Part Two of Stiglitz’s book, focusing in part on the role of social media. That’s a topic of research and debate much larger than anything Stiglitz can take on as an economist, and much larger than I should even try to address here.

I will mention one other factor that may influence economic and policy thought, at both the expert level and the popular level -- the general appeal of arguments based on simplifying the relevant factors. Economists, historically and both on the “right” and “left”, seem notoriously guilty of arguments that simplify economic structures, making their cases on examples that reduce markets to a matter of negotiations and transactions between nondescript individuals without external influences or power relationships. As if the “markets’ of national economies were just aggregates of those simple, idealized cases of the kind of voluntary exchanges that take place at farmers’ markets. Stiglitz himself is not immune to using such examples.

Simplifications are persuasive, and for that matter, pretty much unavoidable in theorizing. Science, after all, begins with simplification. Just as economists don’t account for externalities and other distortions of economic behavior, physicists don't account for mountains, canyons, etc. in laws of planetary motion. But they don’t need to — mountains and canyons don’t relevantly affect the centers of mass they are analyzing. But the distortions of the free market — monopoly power, the power to set prices and costs, etc. — do relevantly affect the performance of economies, so much so that to ignore them is to promote fairy tales.

I’ve already gone very long in this review, so I’m going to bring it to a close. I’ve really only talked about the first part of Stiglitz’s book, his critique of neoliberalism. Part Two addresses the issue I briefly touched on — the influences, including especially social media, that shape public thought and attitudes, particularly when those who control those influences (the corporate media owners and CEOs) pursue their own economic and political self-interests.

Part Three is Stiglitz’s own positive program — the change of course he recommends. Stiglitz is no socialist. He proposes what he calls “progressive capitalism,” a capitalism that takes seriously the causes of unequal freedoms and the distortions that bend the economy to serve the interests of those already best off. In making his arguments, he relies repeatedly on insuring fairness through decisions and policies formulated behind something like John Rawls’ “veil of ignorance” or by Adam Smith’s “impartial spectator.”

I’ll add, because I can’t help it, that the recent US election makes Stiglitz’s proposals seem pretty much moot, at least for the time being. The new president will not be interested in Stiglitz’s thoughts. But they are here, and we can hope for a rebirth of serious concern for increased freedoms, justice, and fairness in the not-distant future.

[Alan Johnson · Rating 5 out of 5]

Joseph Stiglitz is a famous economist who, in addition to his many books and academic studies, was chair of the US Council of Economic advisers from 1995 to 1997 and chief economist at the World Bank from 1997 to 2000. Although I may disagree with Stiglitz on an occasional point or two, I think his overall argument in the present book is quite persuasive: that neoclassical or neoliberal economics is faulty on many levels, especially in its fundamental quasi-religious belief in an “invisible hand” that requires pure laissez-faire in order to benefit society. Stiglitz refutes this premise with economic data, historical evidence, and rational analysis. He sets forth an alternative approach to macroeconomics that reflects his vision of a good society.

Alan E. Johnson
Independent Philosopher, Historian, Political Scientist, and Legal Scholar
https://alanjohnson.academia.edu/
December 12, 2024

[Adam · Rating 5 out of 5]

Joseph Stiglitz continues to prove he's one of the smartest economists out there. It's not because of his expertise in economics however (which is profound). It's because of his understanding of the humanities. While most economists are trying to answer the question of "how to make the economy more productive and profitable", Stiglitz has continually asked "how can we make an economy that promotes the common good".

I recently read On Freedom by Timothy Snyder. It was one of the best books I've ever read and certainly the best I've read on the notion of freedom. Stiglitz echoes many of Snyder's view in this book. But while Snyder focused on the notion of freedom from a philosophical standpoint, Stiglitz presents an analysis coming from the realm of economics with philosophical support.

If we are going to defeat the current surge of rightwing fascism sweeping not the U.S., but in nations across the globe, we need people reading books like these. One of the reasons Democrats lost in 2024 is they tried to run to the center. That's a lose strategy against a far-right party that has pulled the center drastically to the right. As Stiglitz shows, rightwing neoliberalism is why we're in the mess. Democrats since Clinton have bowed to the Right's neoliberal demands and it's why voters don't trust them to do anything different. In The Road to Freedom Stiglitz provides the economic remedies to pull of us out of this neoliberal hellscape. Will Democrats have the courage to run on these issues and reclaim freedom from the perverse notion of what it means to the Right? Or will we capitulate; to be dragged down into a new world where economic opportunity and freedom are notions of the past?

[Tom Arnett · Rating 4 out of 5]

What I liked: Stiglitz does an excellent job showing how unfettered markets fail at addressing major issues such as externalities, public goods, coordination problems, and inequitable distributions. His reframing of the concept of freedom is insightful. He pulls back the curtain on how wealthy people and corporations have captured both government power and the popular narratives about freedom. I especially appreciate that his response to the failures of modern capitalism is not an argument for communism but instead to propose a new version of capitalism—progressive capitalism and social democracy.

Where the book fell short for me: Stiglitz has a clear distain for conservative politics that I think undermines some of the credibility of his arguments. His bias leads me to wonder about ideas and arguments that might be left out of his discussion. While his critique of neoliberal capitalism is strong, his proposed solutions are general and vague. He highlights some good general principles—such as having more ecologically diverse markets and better checks and balances across all centers of power in society—but doesn’t get much into specifics on how new systems and institutions should work or how they should be brought about.

[Ana Sofia · Rating 3 out of 5]

Feel like we’re just rehashing some pretty basic economics principles and then reframing freedom around these. While I agree with the premises I was disappointing it wasn’t bringing more new thinking

[Mick Lister · Rating 5 out of 5]

Proof that neoliberalism is as morally and fiscally indefensible as it feels

[Anisia · Rating 4 out of 5]

More like laissez-unfair.

[Chris · Rating 2 out of 5]

While quite enjoyable to read, a lot of this book has been written before, particularly the extended critique of neoclassical economics, which takes a long time and I don't think adds anything new to the debate.

Quite a lot of it is economics-as-philosophy (ie using economics to explain how we should organise our collective lives, but in quite a value-laden way), which I don't find that comfortable.

And while I'm aligned with Stiglitz politically/economically, it's pretty bold to have your title as a play on Hayek's famous book, which inevitably then lends itself to comparison. Hayek's book is extremely rich and a genuine classic (even if I disagree with his views), and this book feels very light by comparison.

[Lance · Rating 3 out of 5]

Some excellent thoughts on how free markets limit freedom for most.

[Kirsten]

https://www.theatlantic.com/ideas/arc...

[Henk De · Rating 5 out of 5]

Stiglitz guest-lectured at my university last year and was advertising his book there. As an economics student, most of the contents and concepts of this book were not revolutionary to me. Nevertheless, what I think this book did really well, better than any other I’ve read, is that it gathered all these economic concepts, from moral hazard to collective action, and summarized it into a manual for a good society. So it helped me link all these concepts I’ve learned the past few years into an overarching, comprehensive framework for a progressive society (albeit with a focus on the US). Great read and quite accessible.

[Andrei Balici · Rating 2 out of 5]

I am disappointed by this book. Having read some of Stiglitz's earlier work, which I quite enjoyed, I had high expectations. Unfortunately, "The Road to Freedom" did not meet them.

Stiglitz's argument often falls into a predictable pattern: rich corporations and individuals have illegitimate claims on their wealth, and if only we could tax them more, society would magically be better off. This polemic approach feels repetitive and fails to consider how a left-wing government (of which he advocates) might also mishandle the same issues the book claims to solve.

While I agree with the principles of a social democratic form of organization, I find this book rather illusory. Stiglitz’s criticism lacks substance, and his suggestions for a path forward are barely substantiated. The book offers ideological outlines but fails to present a concrete plan.

[Miles Row · Rating 4 out of 5]

There were bits I didn't know but is mostly what I want to say when someone talks about freedom in a simplistic way.

[Brian Ayres · Rating 4 out of 5]

As someone who teaches an advanced placement high school course in Microeconomics, I couldn't help but smile at Joseph Stiglitz's lament in his takedown of neoliberalism on the structure of most economics courses. After spending weeks waxing poetic about the efficiency of the price system that is the foundation of capitalism as well the mythical perfectly competitive market and magical equilibrium, most teachers (me included) barely get to the last section in a semester -- externalities.

Externalities, or market failures, provide the crux of this well-argued and very accessible critique of the economic world created by the theories of Milton Friedman and F.A. Hayek. Specifically, his view that the far Right dismisses the social costs of the market because its “magic” in the long-run is its efficiency.

But to Stiglitz, the scions of modern-day economics got it wrong. Rather than an economy obsessed with profit-maximization, we need an economy focused on social well-being. It is not self-interest that creates prosperity but social cohesion, which in Stiglitz's telling has been destroyed by the skewed view of what constitutes coercion. Stiglitz argues that rather than categorize any government involvement as a removal of freedom, Stiglitz logically asserts that, using a veil of ignorance, one man's freedom (i.e., to carry and use a firearm) is another man's unfreedom (i.e., innocent victims of gun violence).

What is more coercive --> progressive taxation on the rich, denying the wealthy income to distribute to poverty programs; or the misinformation on for-profit social media sites whose algorithms sow distrust and hate toward societal institutions?

Both are technically, but which one undermines goals of a democratic and just society more? Most Americans have convinced themselves that to be rich is most beneficial, so they go along with neoliberalism's doctrine even though tax breaks which do not apply to 90% of us or free trade agreements that favor corporations over workers have led to hollowed out factory towns and despair.

Admittedly at the end of the book, Stiglitz laments that solutions are much harder to implement than identifying the two major externalities of neoliberalism — gross income inequality and political and societal division. Because of this division, I have little hope that much will change. However, thanks to Stiglitz, I will be focusing on externalities a whole lot more, giving my students much needed perspective on the strengths and weaknesses of our mixed economy.

[Panrawee Uyanunt · Rating 3 out of 5]

I actually wanted to give this book 3.5/5, an extra 0.5 for the experience.
I think this book encapsulates why the U.S. failed and why neoliberalism is an evil disguised as “liberalism.” I have no background in economics, nor am I particularly interested in the subject. Still, it’s undeniable that economics and politics are deeply intertwined. Nonetheless, the book didn’t bore me as I expected. I completely agree with the idea that there’s no such thing as total freedom or liberty; my liberty might come at the expense of someone else’s advantage. I appreciate that this message remains consistent until the very last pages.

Progressive tax and progressive capitalism sound decent and look good on paper, but realistically speaking, I don’t think the root of the problem lies in the ideology or the system per se. I couldn’t think of any means to end this corrupted form of capitalism and democracy (or what Orwell called bourgeois democracy), as everything seems so deeply malstructured that dismantling or fixing it little by little might not make any meaningful impact. Therefore, his conclusion about making the world equitable but not too equitable that everyone loses motivation weakens his argument about creating a good society. After all, who has the authority to define equity, how much equity should society allow, and at what cost to those who are left out?

[Arda · Rating 5 out of 5]

This is a book that is well argued and highlights the failures of neoliberal economics, which in the last decades became a cultural hegemon within society.The first premise of this book is one person’s freedom is another’s unfreedom and the concept of freedom is essentially a trade-off between freedoms and it is hard not to agree with this as we see the premise of neoliberalism is that it is the system that provides the most freedom for everyone but as we see in today’s society this assumption does not hold true.
In practice, the expansion of market freedom often leads to economic inequality and power concentration, which restricts the real freedoms of large segments of society. Contrary to Friedman’s claim, leaving outcomes to the market does not maximize freedom, but often entrenches existing power relations and inequalities and Stiglitz explains these problems quite well and offers a well argued alternative.Definitely a must read.

[Krista · Rating 2 out of 5]

The generalized ideas presented worth thought. However, the book lacked quantitative proofs for his emphatic empirical statements. His selective use of feminine and masculine pronouns in impersonal theoretical discussions infuriating as inevitably seemed to use “she” when discussing one victimized/misled or malintentioned and "he" when more positive perspective. He posited thoughts not possible in today’s existing structure yet did not offer concrete regulatory suggestions within current realities, to evolve or morph the existing to his ideal (a few minor examples provided). Redundant, repetitive and self promoting. Lacked the substance expected.

[Rachel · Rating 4 out of 5]

I found this book interesting, if a little ‘Debunking Classical Economics 101’ for my personal taste. In the introduction Stiglitz went so far as to define ‘what is a serf’ for his audience, which led me to wonder – as I did throughout the book – who actually is this book’s target audience? It’s not as dense and objective as, say, Piketty – and Piketty is a man who wears his liberal leanings pretty clearly on his authorial sleeve. There’s quite a lot of zingers launched at American Republicans who so clearly will never read it, so what’s the point in being salty?

That being said, it was a good refresher, it is reassuring to know there are some economists in the world who DON’T think that ‘unemployment doesn’t exist’, and ratification of my understanding that progressive taxation is key to building social safety nets.

Facts I learned:

Stiglitz was part of the ‘Beyond GDP’ movement and a multination alliance called the Wellbeing Economy Government Alliance.

An opportunity set determines freedom to act.

The right to kill [should be] subjugated to the right not to be killed.

‘Neoliberalism in practice was what can be described as “ersatz capitalism”, in which losses are socialised and gains privatised.’

Only half of Americans born after 1980 could hope to out-earn their parents, compared to 90% in 1940.

The Right’s misconceptions about externalities are that they are rare exceptions, that they don’t recognise the important ones, they think they can be resolved via voluntary action, and that any governmental action should be a single instrument, eg taxation.

‘We have seen that it’s intellectually indefensible to claim there should be no public intervention when there are important externalities.

Oliver Wendell Holmes: ‘taxes are what we pay for a civilised society.’

The market did not provide insurance against the pandemic or the Ukraine war. The governments intervened.

Redistributive taxation removes the incentive to exploit.

Classic economics says that high prices attract competitors that drive down prices. In reality, sunk costs mean high prices are sustained. Potential competition can’t replace actual competition because entrants know profitability depends on prices after they enter, not before; prices might fall so much once they enter that they actually lose.

‘Norms may have greater ambiguity than laws and regulations, and ambiguity itself may normally be helpful in constraining behaviour. If there is a bright line, defined by a law or regulation, there will be tendency to push against it.’

When students perform poorly, classical economics says to pay teachers more; but extra pay reminds teachers they’re low-paid. The conversion of the social incentive to teach to a monetary one even discourages hard work. Better to treat workers with respect and dignity and enhance their right to act collectively. – I particularly liked this point!

‘A good society maintains a balance of freedoms, with a particular concern for how abuses of the freedom to contract may expand the freedom to exploit.’

1936 Robinson-Patman Act outlaws price discrimination. It needs to be used, and new anti-trust legislation for ‘settings in which differential access to information confers an advantage.’

‘All societies, even those committed to free speech, put restrictions on that freedom when it imposes harms.’

‘We begin where we are. we respect honesty, kindness, other-regardingness, cooperativeness, and empathy. We dislike suffering and deprivations, injustices, and so forth. It is noteworthy that throughout all the vagaries of time and space, across societies with different economic, political, and social structures, these are virtues in almost all.’

Response to inflation depends on the source of inflation!! Supply-side shocks need fiscal policies to address the supply gaps!

Inequality: redistribute through taxes, public expenditure in healthcare and education, pre-distribution policies like minimum wages.

‘But not only is it the case that marks on their own won’t be sufficiently innovative, they push innovation in the wrong direction.’

‘Even with ample support, the skills transition would be difficult, not to mention the moving costs involved. But under neoliberal ideology, the focus was on “freeing the market”, not levying the taxes that would generate the revenues to provide adjustment assistance.’

‘A free-trade agreement would simply forbid tariffs or subsidies; conceptually, it would be just a few pages long. In practice, trade agreements run to hundreds of pages because of the special treatments given to particular sectors and goods.’

‘The “capital” that is central to twenty-first-century progressive capitalism is not just physical or financial but includes human capital, intellectual capital, organisational capital, social capital, and natural capital – all the foundations of our economy.’

‘It was not then, and it is not today, the case that authoritarianism was arising in social democratic states with large governments, but rather in countries marked by extremes of inequality and high levels of unemployment, where governments have done too little.’

[Julia Henry · Rating 5 out of 5]

my last book of the year! an absolute must-read for my fellow gen zers who are discontented with the current socioeconomic conditions in the U.S. and the West at large. Stiglitz is an accessible writer and adeptly explains concepts others would have stumbled or over-expounded on. definitely one of my top nf reads.

[⭕ slt · Rating 2 out of 5]

Short sighted but honest and in the last parts naive.
Will write a review soon...

[Walter Ullon · Rating 2 out of 5]

TL;DR: Much telling, little showing. Capitalism and its profits are morally illegitimate . The solution is more Government - more taxes, more regulation.

“The changing nature of our society and economy requires more government intervention and investment today than in the past, and accordingly, higher taxes and more regulation.”
- Josepth Stiglitz, "The Road to Freedom"

Joseph Stiglitz’s The Road to Freedom aims to have its cake and eat it too, presenting a vision of “progressive capitalism” that allows for some freeish markets with a heavy dose of paternalism. While the book is ambitious in addressing societal inequality and economic flaws, its arguments are ultimately undermined by sweeping generalizations, internal contradictions, and an unrealistic trust in government intervention. Stiglitz’s critique of markets and advocacy for heavy regulation and redistribution may appeal to those disillusioned with capitalism, but it fails to offer a practical, coherent path forward—and sometimes reads as an exercise in economic moralizing rather than a blueprint for action.

Stiglitz repeatedly questions the moral legitimacy of wages, prices, and wealth in what he concedes are competitive markets. However, this argument is based on two problematic premises:
- That pre-existing wealth distributions inherently taint market outcomes, and
- That preferences in a market economy reflect inequality rather than genuine demand.

This line of reasoning conflates the imperfections of wealth distribution with the mechanisms of market efficiency. Competitive markets—even with wealth inequality—allocate resources efficiently by rewarding individuals for creating value. By dismissing this, Stiglitz overlooks how market forces drive innovation, productivity, and economic growth.

"The fact that the incomes of so many wealthy people are the result, at least in part, of exploitation reinforces the earlier conclusion that we shouldn't give primacy to the distribution of incomes generated by the market economy. It is not a matter of "just deserts." There's no moral justification for such incomes, but there is a moral argument for redistribution, for taking away incomes derived from exploitation. We can even invoke the economists' central concern of efficiency and incentives: redistributive taxation, especially in ways that directly address exploitation and its ill-gotten gains, reduces incentives to exploit."

Even in the unlikely and impractical event that we could actually redistribute wealth that accrued from exploitation, we'd need to figure out:
- Who determines who exploited who?
- How much do we seize?
- How far back are we willing to go looking for evidence of exploitation?
- How will we measure the negative externalities resulting from this?
- How do we ensure this does not result in state-sponsored oppression?

Since we’re at it, let’s point out that while Alfred Nobel did not personally engage in exploitation as commonly defined (e.g., slavery or direct colonialism), his wealth stemmed from industries—explosives and armaments—that were both dangerous and morally contentious. His fortune’s origins lie in enabling industries that contributed to warfare and industrial risks, raising ethical questions, but that didn't stop Stiglitz from accepting the prize, did it?

Moving on, Stiglitz also misses the forest for the trees: market failures and inequalities are real problems, but competitive markets still outperform most government-run alternatives in promoting progress. Blaming markets for reflecting existing wealth disparities ignores the more complex issue of opportunity access—a challenge better addressed through education and innovation, not hand-wringing about prices for Gucci handbags.

Furthermore, Stiglitz reduces the economic freedoms of the wealthy to trivial examples of luxury consumption (e.g., yachts, Rolexes) while portraying redistribution as a morally superior means of expanding the freedoms of the poor. This comparison is overly simplistic and misleading.

Wealth is for the most part, not static, furthermore much of the riches we oftentimes hear about in the news represents stake ownership in a business, not a mountain of gold stashed in some evil lair somewhere. Capital owners do in fact reinvest much of their wealth into businesses, ventures, and innovations that benefit society by creating jobs and opportunities.

Even spending on luxury goods fuels industries, supports employment, and stimulates economic activity. The suggestion that a rich person’s freedom to buy a yacht contrasts unfavorably with a poor person’s lack of opportunities makes for good rhetoric but bad economics. By framing wealth as inherently suspect, Stiglitz ignores its dynamic role in driving progress—and risks alienating the very innovators, entrepreneurs, and risk-takers who keep economies moving forward.

"In the end, though, in assessing trade-offs we inevitably face the issue of societal values-whether, for instance, the enhancement of a poorer person's ability to live up to her potential and expand her freedom to act is more or less valuable than the associated restraint on the freedom of a rich person to buy another Rolex watch, a larger yacht, or a bigger mansion. I know how I and, I believe, most others would assess such trade-offs, were they to make those judgments behind the veil of ignorance."

One of the more tiresome aspects of this book is that throughout, Stiglitz builds convenient straw men of "the right," "neoliberals," and "the Chicago School," portraying them as dogmatic champions of unfettered markets and blind to any flaws in capitalism. This caricature is as lazy as it is inaccurate. Even Milton Friedman and Friedrich Hayek recognized the existence of market failures and externalities. Painting their work as advocating a utopia of pure laissez-faire capitalism misrepresents their arguments and avoids grappling with their real contributions.

Stiglitz lays capitalism’s failures squarely at the feet of neoliberalism while conveniently ignoring the significant role of government intervention in many of the crises he cites. For instance:
- The Great Depression was exacerbated by poor monetary policy and excessive government intervention, not the absence of it.
- The 2008 housing crash stemmed in part from politically driven policies promoting bad credit and reckless mortgage lending through institutions like the FHA and Fannie Mae.

The implication that “pure unfettered capitalism” caused these disasters conveniently sidesteps how intertwined markets and governments often are. If Stiglitz is going to assign blame, he should do so fairly.

One of Stiglitz’s more extreme claims is that unfettered capitalism undermines democracy and paves the way for fascism. While economic inequality can indeed foster political instability, Stiglitz’s argument rests on a misreading of history and a one-sided understanding of the dynamics at play.

The rise of fascism in Nazi Germany, for instance, was not the result of unchecked capitalism but rather heavy state intervention in the economy. Prior to Hitler, the Weimar Republic’s economy was characterized by regulation, cartelization, and state influence over banks and industries—elements that made the Nazi regime’s economic control far easier to implement. As Schuettinger and Butler highlight in Forty Centuries of Wage and Price Controls, Nazi economic policies thrived on a pre-existing framework of government intervention, not on free-market anarchy.

Stiglitz ignores the role of authoritarian state power in shaping these historical outcomes and instead points a finger at markets. His argument conflates economic concentration under state control with the natural workings of capitalism—a misleading simplification that undermines the credibility of his broader claims.

In reality, fascism tends to emerge when democratic institutions are weak, economic hardship runs rampant, and state power becomes unaccountable—conditions that arise as much from bad government policy as from market failures. If anything, a competitive and dynamic market economy, protected by robust institutions, is a bulwark against authoritarianism.

Now, a glaring weakness in Stiglitz’s agenda is his unwavering trust in government regulation and redistribution to solve society’s economic problems. While he criticizes markets for being “shaped by the powerful,” he neglects to acknowledge that government systems are equally susceptible to capture by special interests, inefficiency, and corruption.

Excessive regulation risks stifling innovation and entrepreneurship, which are crucial drivers of prosperity. Stiglitz’s faith in “well-designed regulation” assumes an idealized government immune to lobbying and incompetence. Government efficiency - is that not an oxymoron? Also, redistributive taxation, while well-intentioned, can produce unintended consequences, such as reduced incentives for work, saving, and investment—or worse, a capital flight to jurisdictions less hostile to wealth creation.

Ironically, Stiglitz spends much of the book critiquing how the rich shape market outcomes but expects us to believe that, somehow, those same forces will stop influencing policymakers when taxes and regulations are on the table, something that my favorite American Economist Thomas Sowell calls "the Chess-piece Fallacy". Wishful thinking, to say the least.

Stiglitz leans heavily on moral arguments to delegitimize existing market outcomes, framing wealth accumulation as a product of exploitation, luck, or unfair systems. While inequality is a valid concern, his moral critique lacks nuance:
- Wealth often results from hard work, risk-taking, and innovation rather than exploitation.
- Reducing outcomes to “moral legitimacy” undermines incentives for productivity and economic dynamism.

Furthermore, his solutions—such as “pre-distribution” and expansive taxation—are presented as moral imperatives but lack practical detail. For instance, how exactly does one “pre-distribute” income without eroding the rewards for effort and ingenuity? These proposals, while rhetorically appealing, come across as utopian and impractical.

At times, Stiglitz seems less interested in solving problems than in moralizing about them. For readers looking for actionable ideas rather than lectures about economic sins, this is a disappointment.

"Under capitalism even the wealthy capitalist may have less freedom than is sometimes imagined. If she chose not to act like a capitalist, she would lose her identity and her sense of who she was. To survive in our system of Darwinian capitalism she must be ruth-less, feeling she has no choice but to pay her workers the minimum she can get away with."

Ultimately, Stieglitz’s argument oscillates between admiration for capitalism’s innovative capabilities and a relentless critique of its outcomes. This “have-your-cake-and-eat-it-too” approach is contradictory:
- He celebrates markets for their ability to innovate and grow wealth but undermines their legitimacy through relentless moral and political critiques.
- He argues for “freedom” while endorsing coercive interventions (e.g., taxation, regulation) that restrict individual choice and impose heavy burdens on wealth creation, and have been shown to hurt those it seeks to benefit the most.

Additionally, his romanticization of Scandinavian social democracies overlooks key differences: smaller populations, cultural homogeneity, and high levels of trust in government. Applying this model to larger, more diverse economies like the United States is far easier said than done.

The Road to Freedom is a well-meaning attempt to address inequality and structural flaws in modern capitalism, but it ultimately fails to deliver a compelling or practical agenda. Stiglitz’s arguments rest on moral critiques of wealth, dubious assumptions about markets, and an overly optimistic view of government intervention. By undermining the legitimacy of market outcomes without offering viable alternatives, the book risks alienating readers who value both economic freedom and pragmatic solutions to inequality.

Stiglitz’s lofty rhetoric may resonate with those frustrated by economic inequality, but his vision lacks coherence, practicality, and historical awareness. Ultimately, The Road to Freedom feels like a sermon on market sins rather than a roadmap to genuine economic progress.

Having now read both this book and The Price of Inequality by the same author, I can confidently say that I've had enough Stiglitz to last me a lifetime, and I'm in no need of any more.

Cannot recommend.

[Patrick · Rating 3 out of 5]

Skipped around a bit but read most of it. More of a survey, doesn’t real dig in enough on key points, sometimes feels score settling / refereeing old disputes in the profession.

[Andrea M · Rating 5 out of 5]

Loved it! It’s a very good read for understanding nowadays’ socio-economic landscape.

[Barb Cherem · Rating 4 out of 5]

I loved this book because I've come to the conclusion that most of today's problems in America such as the disinvestment in public entities such as public schools, public health, and public research, gun violence, income inequality and other major issues have root causes going back to "trickle down" economics. I called it "Reaganomics" back when the economy switched to "neoliberalism" it's also called, and Public expenditures for Children were largely eliminated with the hope private entities would replace the public monies. In some places they did for short periods of time, but over the past 5 decades, there was a tightening of such monies in all public sectors from Higher Education (state monies very little) to public health (we saw this in the pandemic, how neglected they'd become) on to public schools (lesser funding due to many causes, most esp. the spreading of same to lesser funds to choice and to public charters), and then to the amassing of concentrations of wealth among a very few (esp. tech giants: Zuckerberg, Musk, Bezos, Gates...). All of these emerge from the failings of the promised prosperity for all of "trickle down" aka "Reagananomics" and ""neoliberalism".
Additionally, neoliberalism led to "profit maximization" for shareholders and the incredible ballooning of Boards of Directors, which in turn lead to sweetheart deals between even ballooning CEO pay and their Boards, also well compensated.
Stiglitz makes a case for concentrations of vast amounts of wealth as has happened only once prior in America to the extent that exists now, you get outsized influence, and typically corruption. The "worse angels" have been emboldened to take advantage of folks without even feeling guilty.
"Greed is good" has reigned, and the promised prosperity with union busting has certainly not emerged. What's emerged is outsized voices among those very wealthy, and influence which has made our politics on behalf of the majority skewed and ungovernable.
Enter Stiglitz'a plans to rebalance the situation so that we don't lose our Democracy to such concentrations that have begun to corrupt our political leaders, and have lead to destroying America as both "the land of Opportunity" for several decades now, and the destruction also of the "American Dream"; it really hasn't existed for some time Stiglitz evidences.

Much of what Stiglitz proposes is "Bidenomics" which is regulations restored for balancing the overage of "maximization" of only profits, without regard to employees, thru reinstitution the counter balance of unions. The checks & balances have broken down at the expense of trust in our institutions, and many if not most, Americans feelings of the economy and systems of gov't being "rigged" against them. That they have not shared in the prosperity around those lucky few CEO types.

Much innovation is in turn drying up, and the increasing of loans for schooling, and lessened opportunities to move up the socio-ecnomic ladder makes it harder to make use of that degree for better pay or salaries, while having expensive loan repayments, and housing costs; upward mobility is blocked. Few young Americans feel inspired to invest in lives that look dismal with both the environment having been asked to absorb damage to increase productivity that has only benefited the few wealthy, not John Q Public.
This has meant that our Democracy isn't working on behalf of the majority and Stiglitz points to many examples of this --- and proposes many things to remedy as was done to counteract the Gilded Age of the 1890s when Industrial Barons reigned. Teddy Roosevelt broke the monopolies and of course the Biden administration has tried to implement anti-trust laws similarly. Biden has also tried to reignite unions for laborers' interests.

But Stiglitz has many other recommendations, one of which I thought very illuminating: the spread of a larger mix of institutional types, not just the enamorment with private business, but with non-profits, co-ops and partnerships, as well as government, as there are many thing Gove't must and can do better than any other institution. All levels: local, state, regional, & national levels in all of these varied entities as well. This makes for a much richer eco-sphere that help balance things out and provide a kind of checks balance on each other.
One example he gives is from the 2008 Great Recession when the only actor that acted in a social responsible manner, was the co-ops that survived that downturn of the Big Banks, who did not act ethically which lead to the Crisis, demonstrating hoe co-ops can actually work quite well, with ethics and the public ownership in mind, rather than merely exclusively being for-profit.

I highly recommend this book, esp. the start of it and the ending, as Stiglitz gives the main points at these strategic points in the book. It is useful reading for anyone interested in ideas for creating improvements, as the "freedoms for one are unfreedoms for another", and this recognition is the most important message of Stiglitz's book. How we get back freedom for the many, and not having the unfreedom of being safe for instance, be eclipsed by the freedom of those who can hurt others (e.g. not wearing masks during spreadable diseases, or having to own assault weapons or AK7s) is the challenge.
I really thing he has the reader thinking deeply about our priorities for a good society, as opposed to all freedom for those who have outsized voices but neglect considerations of the freedoms they're taking from others. Economics is at the root of much of the incentives in a country and over these 5 decades, Stiglitz makes a case for the worst angels being incentivized by neoliberalism, and Not providing its promises of prosperity for all, but rather destroying the American Dream and the feelings of safety, trust and non-material values, in favor of fear, resentment, distrust, and materialism. His progressive capitalism is a more balanced proposal with specificity and good evidence for his case.

[Richard Marney · Rating 5 out of 5]

A Nobel laureate whose contribution to economics marked him as one of the late twentieth century’s greatest theoreticians has devoted his years in this century fighting for the global marginalized populace. Sadly, the rise of neoliberalism and its Frankenstein offspring of modern populism (as many have commented - which paradoxically preys more on the peoples it claims to defend) have moved us farther away from the author’s ideals. This book is well written, insightful and, sadly, unlikely to budge those in power from their current path which deepens the economic divide between haves and have nots, and destroys the environment for our next generations.

[Arup · Rating 3 out of 5]

I don't disagree with the fact that the capitalist pendulum has swung too far but the arguments made here to support that regulation itself can generate more freedom for society doesn't seem balanced and probably won't be enough to sway those who are after unfettered capitalism on the surface and government bailouts underneath. What America suffers is crony capitalism and more regulations don't help. There is a revolving door between the policymakers and the policy abusers. More regulations bring more loopholes that only the rich will know how to exploit.