Tue, May 09, 2006 - Page 9 News List

After John Kenneth Galbraith, who will be on the money?

By Heather Stewart  /  THE OBSERVER , LONDON

The death of John Kenneth Galbraith, at 97, was a reminder that economics has not always been a dry and dismal science practiced by unworldly experts: Sometimes, the number-crunchers escape the lecture theater and burst into public life.

Many of today's economists spend more time on technical analysis, and less on polemic, than Galbraith, who in his 1958 classic, The Affluent Society, helped to diagnose some of the ills of a nation in the novel position of widespread prosperity. But away from esoteric theorizing, there are still plenty who see it as a central part of their role to contribute to popular debate, take part in politics and bring their insights to a general audience.

Foremost among these swashbuckling analysts are Joseph Stiglitz and Paul Krugman, both widely read and frequent contributors to public debate; and, from a very different perspective, Gary Becker of Chicago and Jagdish Bhagwati, an Indian economist at Columbia University, who is a fierce defender of globalization.

Unlike Galbraith, whose technical skills were not much admired by his contemporaries, Stiglitz is a bona fide technician. He won a Nobel prize for his work on asymmetric information in markets (the secondhand car dealer knows which cars on the forecourt are worthless; you don't). However, as is more common in the US than in the UK, he has also played an active and vocal political role. He was a Treasury adviser to US president Bill Clinton from 1993 to 1997, and later analyzed that period of unprecedented boom -- and subsequent bust -- in the Roaring Nineties.

He moved to the World Bank, where he was chief economist, and has since concerned himself in particular with issues of trade and poverty. In his popular 2002 book, Globalization and its Discontents, he argued that the process of rapid trade liberalization around the world has been mismanaged, with the poor suffering the consequences.

His latest publication, Fair Trade For All, picks up the theme, looking at the potential benefits of the stalled Doha round of trade talks for the poor.

Stiglitz's international outlook is characteristic of many of today's public intellectuals. While economists in the 1980s, and to a lesser extent the 1990s, were still fighting the battles of left versus right, Keynesianism versus monetarism, peace has largely broken out about the fundamentals of domestic economic management.

Some of the fiercest disputes are now about who is winning and losing from global economic developments.

Bhagwati, a firm believer in the benefits of globalization, directly takes on many of Stiglitz's arguments and those of noisier anti-globalization protesters.

"We now confront the ready assumption that if capitalism has prospered and economic globalization has increased while some social ill has worsened, then the first two phenomena must have caused the third!" Bhagwati said in his recent book, In Defense of Globalization.

"These critics need to be asked, with a nod to Tina Turner's famous song, What's Love Got to Do with It?: What's globalization got to do with it?" he said.

He goes on to attack the idea that free trade will harm labor standards, the environment or women's rights.

Krugman, an economics professor at Princeton long tipped for a Nobel prize, is best known for his regular column in the New York Times, which he uses to give an economist's perspective on current events, sometimes in a highly political way.

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