As the "New Economy" Crashes, to What Degree Will Mainstream Economists Change Their Stripes?
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On the other hand, even as he has set out to proselytize for this apparently liberal internationalist program, Sachs has suffered a withering progressive attack on his reputation. In Naomi Klein’s The Shock Doctrine , Sachs appears as one of central villains in the story of neoliberal capitalism’s forceful and undemocratic rise. Dubbed “The New Doctor Shock,” he is held up as second only to Milton Friedman in his responsibility for spreading the ravages of the unrestrained free market in past decades.
Now, to identify Sachs as the embodiment of neoliberalism is somewhat unfair: he has long combined advocacy for debt relief, foreign aid, and social safety nets with his belief in capital’s powers, and he has had his fair share run-ins with the IMF over the years. Yet Klein is accurate in portraying Sachs as the more liberal face of market orthodoxy. And those who might think that Sachs is currently atoning for past sins need only to look at his unrepentant attitudes toward the countries he previously advised.
In The End of Poverty and elsewhere, Sachs takes credit for ending Bolivian hyperinflation. He has lauded President Gonzálo “Goni” de Lozada—who went on to implement more radical and far-reaching neoliberal initiatives than Sachs himself had recommended—as a “genius” under whose guidance Bolivia “made a fundamental turn toward macroeconomic stability... [and] economic growth.” Poland, in Sachs’ view, was an even more unqualified success. He writes, “By 2002, Poland was more than 50% richer in per capita terms than it had been in 1990, and it had logged the most successful growth record of any post-communist country in Eastern Europe or the former Soviet Union.”
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.
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.