Challenging the Consensus in the World
Issue   |   Mon, 11/12/2012 - 21:45

One does not have to be an economics major to have heard of Nobel Prize economist Joseph Stiglitz. Whether you agree or disagree with his views, he is everywhere. He is endlessly quoted and debated in articles in leading publications such as The New York Times, The Economist, Vanity Fair and The Guardian. He is the author or co-author of numerous articles in the popular press, as well as over 300 technical economic articles and 20 books. In addition, he has played a significant role in policy, having held leadership positions such as the chairman of the Council of Economic Advisers in the Clinton Administration and the chief economist and senior vice president of the World Bank.

Stiglitz apparently thrives on a life so busy that one wonders how he even has time for it all. Yet, while continuing to be a strong voice in the media, an economist whom policymakers ask for advice, an advocate for development, an editor for several publications, a full-time professor at Columbia University and much more, Stiglitz still finds time to be on the Board of Trustees for Amherst.

As he said while being interviewed for this profile all the way from Turkey, “Amherst exposed me to a whole range of ideas that served me very well in ensuing years.” Clearly, although the holder of over 40 honorary doctorates and at least eight honorary professorships, Stiglitz is still — and always will be — a Lord Jeff at heart.

Early Life
Joseph Stiglitz was born in Gary, Indiana, to Jewish parents Charlotte and Nathaniel D. Stiglitz. Gary — a major steel town at the time — also boasts Nobel Prize winner and Stiglitz’s role model Paul Samuelson as well as other distinguished economists.

His life at home helped develop his later interests in policy. Stiglitz describes his family as one in which “political issues were often discussed, and debated intensely.” His mother’s family consisted of New Deal Democrats who admired FDR. His father, on the other hand, was a Jeffersonian democrat who worried about big business and valued competition in the market. Nathaniel Stiglitz had a deep sense of civic and moral responsibility, which perhaps influenced Stiglitz’s later proclivities for activism. In addition to fostering his interest in policy, he mentions their influence on his love of learning.

“My parents put a lot of emphasis on education,” he said.

While he was in high school, his older brother Mark Stiglitz ’61 was already at Amherst. Stiglitz would follow in 1960 and attend the College on a full scholarship.

“My brother obviously had a lot of influence over me, and was one of the reasons I went to Amherst,” he said.

Changing Academic Interests

The type of education Amherst offered suited Stiglitz well, and played no small role in his path to success. In fact, Stiglitz stated that his “intellectually most formative experiences” occurred during his time at the College.

“What distinguished Amherst was not only what was taught, but how it was taught, and the close relationships we had with our [professors],” he said.

It might surprise some to hear that Stiglitz was a Physics major until late in his third year at the College. However, Stiglitz had “always been interested in development,” and this interest, in addition to the professors with whom he took economics classes led him into the field of Economics.

“Some people were very engaged in public policy, like [James Nelson], and others were much more academic, like [Arnold Collery]. I was attracted to both aspects of economics,” he said.

Indeed, Stiglitz finally decided to major in economics because of the multifaceted nature of the subject — he thought it provided him an opportunity to combine all of his interests to tackle important social problems. Later, he would be able to explore — and contribute to — both aspects of the discipline in his professional career.

After deciding to major in economics, Stiglitz’s professors advised him to go to graduate school because what he would study during his senior year would be largely repeated in his first year of graduate school. The College arranged for him to go to MIT instead of spending his fourth year as an undergrad at Amherst, and ensured that he would receive the financial aid that he required. Later, he would return to finally receive his Amherst degree.

Amherst Activism

However, the social atmosphere and culture of the Amherst that Stiglitz attended was quite different from the Amherst of today. In fact, one of the most defining characteristics of Amherst today — socioeconomic, geographic and racial diversity — was absent. Stiglitz described the Amherst of his day as a men’s college with “maybe one…to three percent of students of color.”

“It was the beginning of change …but it was still just a beginning,” he said.

As the president of the student council (now known as the AAS) who — like many in his generation — was deeply concerned with segregation and the repeated violation of civil rights in the nation, Stiglitz was determined to use his power to help Amherst be a part of this change.

During his time as president, he organized an exchange program with Morehouse College, an African-American school in Atlanta. Impatient with those (like President Kennedy) who took a cautious approach, Stiglitz was one of the Amherst students who participated in the march on Washington — the march where Martin Luther King gave his “I have a dream” speech. It was one of his most memorable experiences during his time at Amherst.

“You got a feeling of some of the huge differences across the country. This was a period before the civil rights bills passed,” he said, trying to explain how difficult it was to think about the issues of the time through a current perspective.

Stiglitz loved the interesting discussions at the student council — and certainly did not back down from the fights that were just as inevitable. Another way in which he tried to change the social culture of Amherst was through his campaign to abolish fraternities, which he viewed as being “socially divisive, and contrary to the spirit of a liberal arts school and community.”

“As you can imagine, at a time when 90 percent of students were in fraternities, this was not always a popular view to have,” Stiglitz said, perhaps understating the extent of the resistance he faced.

There was so much opposition to his changes that a recall referendum was initiated and the editor of The Student at the time took on the cause of removing him from power. He won the referendum, and he continued to use his position to promote social change. Even so, it took many years for the abolishment of fraternities to actually come to fruition — well after Stiglitz had left Amherst.

Even for the busy student council president, however, there were opportunities for recreation. Stiglitz could not remember ever having a meal in town, stating that he and his friends always ate at Valentine. However, there were still occasions for which they would venture off-campus.

“There was actually something probably quite different from today. Quite often on Friday and or Saturday night we would go to Smith or Holyoke. So we would make the trek over … to Holyoke or to Smith,” he said.

Success in Academia

At MIT, Stiglitz spent two years learning from renowned economists such as Samuelson, Solow, Modigliani and Arrow and writing his thesis. After his second year as a graduate student, he moved to the Univ. of Chicago in 1965 to do research under Hirofumi Uzawa, and then to Cambridge in 1966 with a Fulbright fellowship. Stiglitz wanted to see as many views as he could, and worried about “coming too much under the influence of Samuelson and Solow,” as he had edited Samuelson’s papers and worked as Solow’s research assistant. In subsequent years, Stiglitz held academic positions at Yale, Stanford, Duke, Oxford and Princeton, all the while, of course, publishing papers that made numerous important contributions to microeconomics.

Now a professor at Columbia Univ. with appointments at the Business School, the Department of Economics and the School of International and Public Affairs, Stiglitz does not take teaching lightly. Cullen Murphy, a long-time friend of Stiglitz’s and his editor of Vanity Fair, agrees strongly with this and calls the economist an ideal of what certain kinds of scholarship can be.

“His scholarly work … has obviously been widely recognized…but not everyone leverages that position into one of a teacher to ordinary people. Joe has done so,” he said.

National/International Stage
In March 1992, Stiglitz moved to Washington to join the Clinton Administration, first as a member and then, from 1995 to 1997 as the chair of the President’s Council of Economic Advisers (CEA). He describes that period of time as a wonderful experience, one that was challenging and required him to draw upon and go beyond the vast quantity of knowledge he had acquired over the years. Armed with prior research in imperfect markets, Stiglitz and the CEA helped to define a new economic philosophy — a “third way,” which “recognized the important, but limited, role of government, that unfettered markets often did not work well, but that government was not always able to correct the limitations of markets.”

Clinton was re-elected in 1997, and asked Stiglitz to continue serving as the Chairman of the CEA. However, Stiglitz had to decline. He had been approached by the World Bank to be its senior vice president for development policy and its chief economist, and was on his way to what would be a completely different experience. It was time for him to take on the challenge of development head-on.

At the World Bank, however, he found much that he disagreed with. At the time, the IMF was advocating the Washington Consensus, a set of neoliberal or market fundamentalist prescriptions that encompassed policies in such areas as macroeconomic stabilization, economic trade and investment liberalization and the expansion of market forces within the domestic economy. Stiglitz believed that the Washington Consensus was based on incorrect economic theory and was scandalized that the IMF “used their economic power effectively to force countries to adopt [the] policies, undermining democratic processes.” After a long series of controversies, he left the World Bank in January 2000. The following year, he won the Nobel Prize in economics for his analyses of markets with asymmetric information.

Personal Life

With Stiglitz’s ever-constant presence in the media and classroom as well as his strong media personality, it is hard to imagine him in a context other than the world-renowned economist that he is. Certainly, he says, his professional life takes up a lot of his time. Besides serving as a full-time professor at Columbia, he also spends a lot of time serving on various kinds of commissions and boards, writing and editing for a couple of journals.

Luckily, or perhaps as a consequence, his hobbies fit in well with his job. Because Stiglitz does a lot of informal advising and is often involved in global initiatives to raise more money to help development in developing countries, he travels often. He enjoys photography, taking time out to relax and exploring the countries that he is near and or visiting.

“This summer, we spent some time in Tunisia, South Africa, and Mozambique and Argentina,” he said.

Murphy, who first got to know Stiglitz when they joined the Amherst Board of Trustees in the same year and has been friends with him for over 10 years, explained what Stiglitz was like outside of media appearances.

“I suspect that what the public may not know … is how personally approachable he is, and how friendly, and funny, and how he actually listens to people and asks them questions,” Murphy said.

Except for his friends, family and students, however, Stiglitz will most likely continue to be seen as the controversial economist who has an endless fount of ideas about everything from U.S. economic policy to globalization. He will be active on the international arena for a long time to come, and Amherst will continue to watch with pride.