As the "New Economy" Crashes, to What Degree Will Mainstream Economists Change Their Stripes?

By Mark Engler, Dollars and Sense. Posted January 3, 2009.

In her criticism of Sachs, Naomi Klein rightly points out that most Bolivians see their history very differently. Goni’s reshaping of the economy took place amid massive protests, reforms exacerbated the country’s deep inequalities, and the poor were disproportionately made to bear the anguish of the changes. Klein sees Poland as an even greater affront: As of her writing, the country had the highest unemployment rate in the European Union, and “40% of young workers were unemployed in 2006, twice the EU average.” She writes, “Shock therapy, which eroded job protection and made daily life more expensive, was not the route to Poland’s becoming one of Europe’s ‘normal’ countries (with their strong labor laws and generous social benefits) but to the same gaping disparities that have accompanied the counterrevolution everywhere... from Chile to China.”

Sachs is reportedly upset by his portrayal in Klein’s book. Unfortunately, the public has yet to benefit from a head-to-head debate: When the two authors were slated to be on the same panel at the American Sociological Association conference in Manhattan during the summer of 2007, Sachs backed out—due to a scheduling conflict, he says.

Hi-Tech Re-branding

Whatever the case, the makeover that Sachs continues with Common Wealth is less a defection than a re-branding exercise. In the new book, he repeatedly states that the market alone is not enough: “The pressure of scarce energy resources, growing environmental stresses, a rising global population, legal and illegal mass migration, shifting economic power, and vast inequalities of income are too great to be left to naked market forces and untrammeled geopolitical competition among nations.” Yet Sachs isn’t so much critiquing the harm that markets can do as he is suggesting that they need to be nudged every once in a while with some government-sponsored “incentives” to work in the public good.

Chang characterizes Sachs’ earlier writing on economic integration as “more balanced and better informed” than Jagdish Bhagwati’s, “but ultimately flawed.” In the end, Sachs retains the belief that trade, commerce, and technological progress will inexorably lead to growth and prosperity. In fact, in Sach’s view, technological progress and prosperity are what make eliminating poverty possible. In one tidy paragraph, he dismisses exploitation as a significant force in the world economy. Instead, Sachs writes, “technology has the wonderful property of being non rival; each person, business, or country can adopt the technology without the ability of other to adopt technology as well.” Thus, all can thrive.

“The central solution to ending extreme poverty,” Sachs explains, “is to empower the poor with improved technology so that they can become productive members of the world economy.” Since the poor cannot afford these technologies on their own and are stuck in “poverty traps,” wealthier nations must provide generous foreign aid to help them to their feet. His heroes in this endeavor are philanthropists like John D. Rockefeller and Bill Gates, who have seen the wisdom of investing in humanity’s common well-being.

Technological boosterism also infects Sachs’ prognosis for global climate change, making him a less-than-convincing environmental guru. Common Wealth provides a familiar overview of the rise in atmospheric CO2 levels and the potentially disastrous consequences of global warming, warning that “a business-as-usual path... will not carry us to safety.” Sachs then preoccupies himself with demonstrating that “powerful technologies”—including improved hybrid cars and devices that can collect excess carbon dioxide from the atmosphere—“will likely be available to enable us to mitigate the climate shocks at a very modest cost.” With some dedicated public effort, “modest economic incentives,” and investment in research and development, he tells us, we can beat global warming on the cheap. As for the type of political resistance that has vexed previous climate negotiations, this, too, can be easily overcome: “Yes, there will be a fight over allocating costs, but it need not be a huge battle,” he imagines.

As his book progresses, not only do Sachs’ reassurances begin to seem Panglossian, but his can-do rhetoric grows bland. Common Wealth suffers from the lack of memoir and storytelling elements that made The End of Poverty appealing, if problematic. The new volume ends up reading something like a political campaign book—perhaps for someone running to head the United Nations Development Program.

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Mark Engler, a writer based in New York City, is a senior analyst with Foreign Policy In Focus and author of How to Rule the World: The Coming Battle Over the Global Economy (Nation Books, 2008). He can be reached via DemocracyUprising.com.

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