Joseph Stiglitz

Joseph Stiglitz, who teaches at Columbia, was awarded the Nobel Prize in Economics in 2001. His most recent book is Freefall: Free Markets and the Sinking of the Global Economy.

The present crisis should lay to rest any belief in ‘rational’ markets. The irrationalities evident in mortgage markets, in securitisation, in derivatives and in banking are mind-boggling; our supposed financial wizards have exhibited behaviour which, to use the vernacular, seemed ‘stupid’ even at the time. If we are to design policies to prevent crises or to deal with them when they occur, it is essential to understand the critical flaws in the standard paradigm.

Complaints about the impact of economic globalisation are not new. On 9 December 1719, in response to the growth in cotton imports from India, the merchants and traders of Bristol submitted a...

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