Joseph Stiglitz

How Progressive Capitalism Sustainably Promotes Societal Wellbeing

The state of economic inequity in the United States makes tangible one of Dr. Joseph Stiglitz’s core messages: neoliberalism has failed. The U.S. has long lagged behind its peer countries’ in equality not just in income and wealth but in opportunity and health, and the gap between the uber-wealthy and people who live in poverty only grows wider.

Joseph’s studies in economics have advanced the world’s understanding of market inefficiencies and how to address them in ways that simultaneously create more equitable systems. In 2001, he won the Nobel Prize for Economic Sciences for his analysis of how asymmetric information—when a seller knows more than a buyer or vice versa—causes market failures. Today, he continues to study the ways markets fail people with fewer resources and options, making an argument for an alternative economic model to that prevailing today (which is often referred to as “neoliberal capitalism.”)  This alternative  he refers to as “Progressive Capitalism.”  

“Fundamentally, Progressive Capitalism means that we don’t exist to serve the economy; the economy exists to serve us,” Joseph said. This economic framework aims to reform our economic system to better serve society by prioritizing equity, sustainability and responsible governance. He links this definition of Progressive Capitalism to The Wealth of Nations by Adam Smith, a founder of modern economics who examined how wealth was generated in the late eighteenth century. Joseph posits that if the book were written today, it would use a more social lens, more concerned with wellbeing than wealth itself,  and would focus more on education and creating a learning society and a knowledge economy. The takeaway would be, “The source of wealth and well-being for individuals and nations is Progressive Capitalism.” 

Surmountable Challenges to Reform 

Joseph knows that there are complex barriers to implementing Progressive Capitalism, but he asserts that this shift is possible. “There is an alternative way of organizing our society, but it won’t happen overnight. It’s not a revolution, but a grand evolution of our current systems.” “My vision is an ecology of institutions, public and private, engaging with and complementing each other, providing checks and balances against each other,  providing an alternative way to organize our economic, political, and social systems.”

One of the primary roadblocks to this framework, Joseph says, is the issue of exploitation, including that of workers, consumers, and the environment. “Some companies are making money from pollution and don’t want the kind of system that I propose. Some people don’t want a more equal distribution of income.” 

Joseph argues that these barriers can be overcome through support from a better informed and more engaged citizenry, and a more active civil society. 

The Progressive Capitalism model requires government involvement to regulate markets, protect workers and consumers, and enforce sustainability practices to prevent exploitation. Joseph argues that the U.S. should adopt this model which “emphasizes true democracy, ensuring that there are no concentrations of market power and wealth.” 

Joseph continued to develop his proposal for Progressive Capitalism as a driver of equity and collective prosperity while working on his next book during his recent Bellagio Center residency in April. He says that there were many instances during his residency that expanded his perspective. “We had one convening about the transformative role of education in society. I hadn’t, at that point, focused on education in my writing, but the discussions were in line with my thinking and I was inspired to include it.”

Connection Through Big Bets 

Joseph also expressed his admiration for co-resident Anir Chowdhury, who leads Bangladesh’s flagship digital transformation program, Aspire to Innovate (a2i). “Anir has a comprehensive approach to digitalization in Bangladesh that actually changes individuals’ lives and holds institutions accountable. Working with Anir was quite valuable to me,” he said. 

Generations of experts in Joseph’s field have come through the Bellagio Center’s doors over the years. One day at Bellagio, Joseph came across a photo of his late mentor and MIT thesis advisor, Robert Solow, who frequented the Villa several times for convenings and residencies from 1977 to 1984. Like Joseph, Solow won the Nobel Prize and went on to examine the economics of inequity in the U.S. In some ways, Joseph carries on his legacy.