Milton Friedman, economic competition and poverty

Subsequent prime ministers, especially Margaret Thatcher, dismantled much of this mixed economy.

In recent years a number of South American countries, including Bolivia, Brazil and Venezuela have reacted to uncontrolled free markets bringing about large-scale poverty and violent consequences by creating their own protective mechanisms.

In Argentina skilled workers, unemployed when owners closed factories, took the situation into their own hands and re-opened work-places, in one case all workers taking home the same pay whatever their daily responsibility, in another the workers agreeing on a sliding pay scale according to task.

In Globalisation and Its Discontents Joseph Stiglitz refers to “reformers who leaned to the right, the disciples of Milton Friedman and of radical market reforms, who paid too little attention to the social and distributional consequences of policy”.

Stiglitz is not opposed to market forces or globalisation in themselves, but in his 2006 book Making Globalisation Work reports:

The sad truth … is that outside of China, poverty in the developing world has increased over the past two decades. Some 40 per cent of the world’s 6.5 billion people live in poverty (up 36 per cent from 1981), a sixth - 877 million - live in extreme poverty (3 per cent more than in 1981). The worst failure is Africa , where the percentage of the population living in extreme poverty has increased from 41.6 per cent in 1981 to 46.9 per cent in 2001 … this means the number of people living in extreme poverty has almost doubled, from 164 million to 316 million.

He goes on:

Today, most academic economists agree that markets, by themselves, do not lead to efficiency; the question is whether government can improve matters.

In the former Soviet Union:

The transition from communism to the market, which was supposed to bring new prosperity, instead brought a drop in income and living standards by as much as 70 per cent.

When he moved to the World Bank Stiglitz “continued to push for the right balance between the private and public sectors and to advance policies promoting equality and full employment”. He continues “Today, the intellectual defence of market fundamentalism has largely disappeared … Without appropriate government regulation and intervention, markets do not lead to economic efficiency”. For Stiglitz, the trickle-down theory is dead, if it ever lived.

The debate still rages, however. In The Spectator of December 2, 2006 associate editor Allister Heath, in a story titled “It is a wonderful world: richer, healthier, and cleaner than ever” he reviews Indur Goklany’s book The Improving State of the World, which “demonstrates that on every objective measure of the human condition … well-being and quality of life are improving round the world”.