2020 is a historic year: the sweeping pandemic, the sluggish economy and the complicated major-country relations all foreshadow an unpredictable future. on July 3rd, Prof. Justin Yifu Lin and Nobel Laureate Prof. Joseph Eugene Stiglitz, two top economists from China and the U.S. attended the online launch event for the Chinese version of People, Power, and Profits: Progressive Capitalism for an Age of Discontent and talked about the opportune book that helps us paint a clearer picture of the current world. Here is an overview of the speech by Prof. Justin Yifu Lin, Honorary Dean of the National School of Development and Dean of both the Institute of New Structural Economics and the Institute of South-South Cooperation and Development at PKU.
Prof. Lin started his speech by paying respect to Prof. Stiglitz, who was his predecessor – though years apart - at the World Bank as Senior Vice President and Chief Economist. More importantly, Prof. Lin said that he drew inspirations from Prof. Stiglitz’s Nobel-clinching theory of asymmetric information for his doctoral dissertation. The gratitude went deep as Prof. Lin recalled the kind and generous help of Prof. Stiglitz to the NSD, which he founded in 1993 and was previously known as China Center for Economic Research.
Prof. Stiglitz fits the Chinese paradigm of an intellect who learns for the purpose of knowing and reforming the world, said Prof. Lin. Not content with academic accomplishments, Prof. Stiglitz has been actively working for the US government and the World Bank, as well as offering policy advice to many countries in the world. His forced departure from the World Bank was prompted by his criticism of neo-liberalism during the Asian Financial Crisis in 1997, which illustrates his morality and courage in face of adversity, said Prof. Lin.
In his book, Prof. Stiglitz offers in-depth analysis of the economic, social and policy issues in the US by going straight to the root causes. Prof. Lin hopes that the US government will adopt Prof. Stiglitz’s advice and undertake necessary reforms, for such reform prescriptions are of critical importance for the US, China and even the whole world. Unfortunately, that is not very likely to happen, said Prof. Lin, for the current political system in the US has been taken hostage by the elite class and the result has been widening wealth gap, hollowing of industries, and shrinking middle class. Such internal conflicts have led to the head-rearing of nationalism and the election of President Trump. As admitted in the book, only a revolution will be able to sort out the entrenched structural issues in the US.
The book offers plentiful of inspirations for China, said Prof. Lin, in that one should understand the essence and purpose of economic development. Market competition is needed to spur innovation and realize effective resource allocation; at the same time, governments are required to play an active role in overcoming market dysfunctions, improving infrastructure or offering all sorts of appropriate institutional arrangement. The purpose of economic development is to increase the income level of all people and enable everyone to benefit. Not only should governments and societies help the underprivileged, but they should also guard against financial and technological oligarchs’ monopoly on wealth. In short, what’s needed is both an efficient market and an effective government, which lies at the heart of Prof. Lin’s new structural economic theory.
(By William Chen)