By Andrew Ross Sorkin, DealBook, April 20, 2019<\/p>\n
The economist Joseph Stiglitz discusses Bernie Sanders, social policy and how we define ourselves \u2014 and one another.<\/em><\/p>\n Joseph Stiglitz settled into a booth at his favorite diner on the Upper West Side last week with a curious, almost satisfied smile on his face.<\/p>\n He won a Nobel Prize<\/a> nearly two decades ago for identifying the inequities and imperfections in market economies and has spent a career warning of the perils of wealth concentration<\/a>, railing against monopoly power and championing higher taxes.<\/p>\n At last, a lot of people seem to be listening.<\/p>\n \u201cIt\u2019s been a long fight,\u201d he said.<\/p>\n The cause has been taken up by the new stars of the left, like Representative Alexandria Ocasio-Cortez, and can trace much of its current momentum to the rumpled rabble-rousing of Senator Bernie Sanders. The policy points Mr. Stiglitz talks about \u2014 a higher minimum wage, a public option for health insurance and more \u2014 could just as easily come from the mouths of any of those seeking to unseat President Trump in 2020.<\/p>\n And yet they demonstrate how the words we choose to talk about our economic priorities are almost as important as the priorities themselves.<\/p>\n Last year, for the first time in a decade, a Gallup poll showed that Democrats had a more positive view of socialism than they did of capitalism<\/a>. Those two words may play a pivotal role in our next election: Some Democrats have embraced the label of socialist, one long attacked by Republicans. And even some of those who have profited most from American-style free markets have worried about their sustainability, with the billionaire investor Ray Dalio going so far as to say that \u201ccapitalism is broken<\/a>.\u201d<\/p>\n<\/div>\n<\/div>\n Mr. Stiglitz, stabbing his fork into his salad, said he believed there had been a critical misunderstanding of the terms themselves \u2014 and the economic theories behind them \u2014 that had allowed for their weaponization.<\/p>\n \u201cThe meanings of the words have changed over time,\u201d said Mr. Stiglitz, the chairman of the Council of Economic Advisers under President Bill Clinton and a former chief economist of the World Bank. And the words have become the subject of a branding battle crossing political and generational divides.<\/p>\n The professor in Mr. Stiglitz shared a history lesson that reached back to the early 20th century, about how socialism and communism became linked. And he made the case that Mr. Sanders, a self-described democratic socialist, wasn\u2019t actually a socialist \u2014 at least as the identity has long been defined.<\/p>\n Mr. Sanders\u2019s agenda \u2014 which drew a fair share of cheers during a Fox News town-hall<\/a>-style meeting this week \u2014 is not focused on \u201cownership of the means of production\u201d or a statist system, Mr. Stiglitz said. \u201cHe\u2019s really concerned about the social contract of health, education,\u201d he added.<\/p>\n<\/div>\n It is not surprising that Mr. Sanders\u2019s supporters trend young<\/a>, a group for which the word \u201csocialism\u201d holds no fears of conflict with the Soviets or baggage associated with the Berlin Wall.<\/p>\n \u201cSome people are trying to attach more emotions to the historical legacy of socialism, which was never the same as communism, but in the United States those distinctions have gotten blurred,\u201d Mr. Stiglitz said.<\/p>\n The attacks from the right have been anything but subtle. Just this month, Mr. Trump declared, \u201cWe\u2019re going into the war with some socialists.\u201d And Republicans have posited that Venezuela\u2019s challenged economy is the inevitable result<\/a> of any movement in the policy directions embraced by the left.<\/p>\n The word leaves a bad taste even in the mouths of many on the left, including Nancy Pelosi, the speaker of the House, who lived through the height of the Cold War. \u201cI do reject socialism as an economic system,\u201d she said on \u201c60 Minutes\u201d last weekend. \u201cIf people have that view, that\u2019s their view. That is not the view of the Democratic Party.\u201d<\/p>\n (In Europe, Mr. Stiglitz said, similarly minded politicians might rightly be called social democrats. A simple switch in word order emphasizes the \u201csocial\u201d instead of \u201csocialist.\u201d)<\/p>\n It all comes back to semantics, Mr. Stiglitz said. And perception was on his mind when titling his new book, \u201cPeople, Power and Profits: Progressive Capitalism for an Age of Discontent,\u201d which is to be published next week.<\/p>\n In it, he maps out a plan that he calls a \u201csocial contract\u201d to improve jobs, health, education, housing and retirement. In fact, it wouldn\u2019t be surprising if it turned into the economic platform for a presidential candidate.<\/p>\n<\/div>\n Mr. Stiglitz proposes using a combination of market forces and government nudges \u2014 a higher minimum wage and an expanded earned-income tax credit, for example \u2014 to help the poorest among us. He also supports a \u201cpublic option\u201d to improve competition in the private sector in areas like health care and even retirement savings.<\/p>\n That\u2019s not to say he views government as a panacea. For example, he wants to see the mortgage industry privatized. \u201cIn a private-sector economy, to have this huge piece of the economy that\u2019s not run by the private sector is odd,\u201d he said. Still, he also recommends a public option so that the government could support the mortgage market in certain cases.<\/p>\n Mr. Stiglitz said he had chosen \u201cprogressive capitalism\u201d for his book\u2019s title because he worried about triggering a visceral reaction to the word \u201csocialism.\u201d<\/p>\n \u201cI\u2019m trying to avoid some of the emotions that are still attached,\u201d he said. \u201cI try in my title to use progressive capitalism to try to say I believe in a market economy, but I also believe in government regulation.\u201d<\/p>\n Even as popular figures on the left have embraced the label of socialist \u2014 Ms. Ocasio-Cortez is a member of the Democratic Socialists of America<\/a> \u2014 others have sought, like Mr. Stiglitz, to underscore their capitalist views. Pete Buttigieg, the mayor of South Bend, Ind., who formally announced his candidacy<\/a> for president this week, calls himself a proponent of \u201cdemocratic capitalism<\/a>.\u201d<\/p>\n If the evolving meaning of socialism strikes you as an inventive bit of rebranding, Mr. Stiglitz believes the conservative idea of American capitalism as an unfettered free-market system is itself a myth.<\/p>\n \u201cThere is no Darwinian capitalism,\u201d he said. \u201cEverybody would say you need some degree of regulation of banks. I mean, no one is talking about real laissez-faire banking.\u201d<\/p>\n Even the word \u201ccapitalist\u201d has evolved, Mr. Stiglitz said. It is only since the late 20th century and the rise of the economist Milton Friedman, he contends, that \u201ccapitalist\u201d stopped being a dirty word. It was once used in what he called \u201ca pejorative way.\u201d<\/p>\n<\/div>\n<\/div>\n Capitalists were \u201cpeople who were exploiting workers,\u201d he said.<\/p>\n That is an opinion, of course. And it is a view that is not hard to come by in some circles now, either.<\/p>\n Language changes, and as convenient as it can be to use linguistic shorthand, it\u2019s important to remember that beneath the words are ideas \u2014 the things we should be talking about.<\/p>\n<\/div>\n<\/div>\n Andrew Ross Sorkin is a columnist and the founder and editor-at-large of DealBook. He is a co-anchor of CNBC\u2019s Squawk Box and the author of \u201cToo Big to Fail.\u201d He is also the co-creator of the Showtime drama series Billions.<\/em><\/p>\n