In a recent article, Joseph Stiglitz, former chief economist of the World bank, Nobel prize winner in economics and now adviser to the British Labour Party, reckons that we are in a new era of monopoly and this is a the key cause of extreme inequality of income and wealth, inefficiency and low productivity growth and general stagnation in the major economies.
Stiglitz argues that the classical and neoclassical schools of economics assumed ‘competitive markets’ where all companies were on a ‘level playing field’. This meant that owners of capital received profits that matched their contribution to an increase in output, their ‘marginal product’.
This rosy view is dismissed by Stiglitz. In reality, who gets what in society is dependent on ‘power’. Large companies can dictate prices in markets to small companies and can dictate wages to labour where they have no collective power (trade unions). This ‘monopoly’ (over…
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