Has Karl Marx made a comeback in the West? Has he changed his appearance but not his message? That’s the thought that crosses your mind as you read this book.

The author, Joseph Stiglitz, is a Nobel prize winner in economics for his work on how information asymmetry makes markets inefficient. He has also been a strong critic of ‘market fundamentalism’ meaning thereby the belief that market forces, if left to themselves, will provide everything that societies need.

That said he also thinks that capitalism isn’t a bad thing which, if guided properly by a benign and all-knowing government, will deliver socially optimal results. In other words, what the world needs is more regulation, not less, more government not less.

This is Marxism-lite. Marx thought markets and private property were abominations that had to be abolished and replaced by state ownership of economic resources, along with the very visible hand of the state in economic processes. Stiglitz disagrees but nevertheless argues for state intervention via strong and pervasive regulation. He thinks capitalism needs to be reformed by wise people.

It’s in this return of the state and the assumption of its wisdom that his prescriptions resemble Marxism. We in India now know how impossible this is. Like love and fresh air, wisdom is usually in very short supply.

Another aspect in which there is a resemblance is that he discusses all this in the name of freedom. If Marx had talked of labour being free of chains — “Workers of the world unite, you have nothing to lose but your chains” — Stiglitz talks of full freedom. Last week he even explained his support for Kamala Harris in terms of freedom. She will be good for it, he thinks.

Like Marx he thinks if the world does everything he is suggesting, individuals will be fully free and societies will attain nirvana. So the book is devoted to all the practical and philosophical aspects of freedom and how best to achieve it. The only limiting criterion is the old one: your freedom ends with my nose, meaning you can do what you like provided you don’t hurt anyone or anything.

It’s natural, however, to wonder at the paradox: how will people be free if simultaneously they are also subject to the heavy hand of the state via regulatory authorities? Another word for it is state paternalism where there are more bans than permissions.

India has been trying it for 70 years and failing marvellously. He doesn’t mention that even once, even in passing.

He also doesn’t discuss large bureaucracies, which are necessary for the enforcement of regulations. Or, for that matter, adjudication by judges if and when disputes arise, as they must. And the rules and laws that are needed to guide the bureaucracy and prevent discriminatory and discretionary power. Stiglitz assumes honesty which, in terms of behavioural economics that he admires so much, is quite irrational.

The big questions

That said, Stiglitz raises a large number of questions that countries will have to deal with as they seek an optimum trade-off between economics, politics, international relations and so on.

Stiglitz talks about many things, from climate change to social media to behavioural change via technologies to coordination when incentives are not compatible to trade and investment agreements to John Rawls’ idea of justice as fairness to even family vacations. After a point you want to say, hey Joe, ease up man, stop rambling. And remember, panaceas are dangerous.

There are three basic ingredients that he discusses: democracy, coercion and capitalism. The problem to be solved is the proportions in which these three must combine in order to achieve a fair balance that enhances individual freedom.

And the answer, of course, is that no one knows — and to use a term that he doesn’t — societies must proceed by a process of what the French call tatonnement, or trial and error. That is, you grope towards a solution without ever reaching it.

In this sense Stiglitz differs from Marx who simply said ‘off with their heads’ to reach what microeconomics calls a corner solution: just the one thing please, no combinations, because we know what’s good for you.

But the heart of his anguish and angst lies the contradiction that Marx identified so brilliantly: what is the price that must be paid in terms of individual freedoms to expand social freedom. Stalinist Russia tried brute force. The West uses the price mechanism. China is using technology to award social points. In the end, though, it all boils down to policing the individual, never mind how.

Stiglitz, like many other Samaritans, including I daresay the Kim family of North Korea, means well. His book is what Indians call hitopadesh or good advice. And like all such advice it is impractical because whichever way you come at it, the problem of achieving freedom via coercion is simply unsolvable.

Title: The Road to Freedom: Economics and the Good Society

Author: Joseph Stiglitz

Publisher: Allen Lane

Price: ₹900

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