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Joseph Stiglitz Talks About Creating A Learning Society

Joseph Stiglitz talks about the latest in his long line of books exploring economic ideas: “Creating a Learning Society: A New Approach to Growth, Development, and Social Progress”.  Written with Bruce C. Greenwald, it evolved from the Kenneth J. Arrow Lecture Series.  The video is a recording of the lecture he gave talking about the principles of a learning society and how we achieve it. It was given as the Angus Miller Lecture for the Royal Society of Arts in Scotland.

Joseph Stiglitz
Joseph Stiglitz

We know that standards of living come about through advances in technology rather than through the accumulation of capital. Robert Solow, another Nobel prize winning economist developed proofs for this perspective 60 years ago. A financial vision of society is less useful than that of improving our means.

Stiglitz describes how it is an impoverishment of knowledge as well as resources which impedes countries from changing their circumstances of poverty to better well being and resilient economies. At the centre of this he places learning as a most important means to advance citing the Scottish Enlightenment as a particularly good example.

In his book he argues that development of a country is related precisely to the level at which a nation addresses it’s educational and learning needs. In Creating a Learning Society, Joseph E. Stiglitz and Bruce C. Greenwald cast light on the significance of this insight. The book draws inspiration from their teacher, Kenneth J. Arrow’s famous 1962 paper The Economic Implications of Learning by Doing – a significant milestone arguing the importance of situated learning and valuing the vernacular knowledge which people inherently own.

A major theme which is explored is how knowledge production is different from the production of other kinds of goods.  Knowledge has different mechanics as it multiplies when it is brought together and does not have the same limitations which physical goods carry:

 

If two people come together with a coin and swap these coins, each person walks away with one coin; if two people come together with an idea and swap these ideas – both walks away with two ideas.

 

Market economies dont produce and communicate knowledge efficiently; in fact they are geared up to impede the flow of knowledge through the setting up of monopoly rights on knowledge – i.e. the patent and copyright system. The Austrian classical economist Joseph Schumpeter argued a century ago that the major virtue of a market economy was its capacity to innovate. He suggested that a succession of monopolies would lead to higher standards of living in the long run.

Schumpeter’s ideas on this have not gone largely unchallenged. Monopolies, like Microsoft, can actively suppress innovation unless controlled by anti-trust authorities, they can engage in anti-competitive behavior which reinforces their monopoly power. Private incentives are not connected with social returns. Companys can gain from innovations that increase their market power which in turn enables them to get around regulations, or capture monies that would otherwise filter to other concerns.

 

Stiglitz argues that a badly designed intellectual property rights system locks knowledge away from bringing the innovations to a society which should come from it.  He uses the example of the patenting of genes by a company that developed a mediocre test for cancer; when Yale University came up with a better test, and tried to make it widely available, the legal system prevented this and impeded an important medical advance resulting in the deaths of many people….

 

This idea of societies closed to learning and knowledge sharing consistent with the market economies is antithetical to nations closing the knowledge gaps which are pivotal to growth and development.  Creating a learning society is of central importance to maintain living standards in advanced countries and develop sustainable economies to replace the wasteful and inefficient ones in place.

Stiglitz and Greenwald try to address some of the big issues with keen analysis offering thoughts on new models of “endogenous growth”.  They explore policy areas around trade and industry and suggest how they can be used to help create a learning society. There is detailed discussion on how intellectual property regimes retard learning and innovation, as mentioned, and hold within themselves inherent contradictions – in that, if you search the whole world for examples of your idea (prior art) you will never get around to developing your idea in a tangible way.

 

In terms of industrial policy, the idea that free trade may lead to impeding technological advance, and that forms of industrial protection may have benefits  are examined. All in all, the re-examination of the dominant rhetorics in economics thinking and systems of learning is suggested in this interesting volume.

 

Professor Joseph Stiglitz is an economist, he teaches at Columbia University and is one of the most influential economists in the world today. He was awarded a Nobel Prize in Economics in 2001 along with George Akerlof and Michael Spence for laying the foundations for the theory of markets with asymmetric information. He was chief economist of the World Bank, and was Chairman of the Council of Economic Advisers. He has become known for his critical view of free-market economists, income distribution, the International Monetary Fund and the World Bank.

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