The distinguished Columbia University economist Jeffrey Sachs has produced a book of extraordinary passion, and even anger, combined with hard-headed analysis that his critics will find hard to refute. Apart from a lapse during the early 1990s, when he was among those advising the Russian government to take a great leap forward into constructing a market economy without much institutional support, Sachs has long been that rarity, an anglophone economist who appreciates the importance of social and political institutions.
In the 1980s he showed this in his analyses of inflation. In recent years he has written about world poverty, health policy and environmental issues. In this new book he presents a devastating critique of the combination of financial and political power that has now brought the US economy, and much of the global economy, to its knees. He describes how corporate lobbyists from various sectors of the economy, but most importantly finance, have captured - more or less bought - both the Democratic and Republican parties in Washington, producing policies that suit their private ends but often do not serve the interests of the American people.
Unlike some commentators, he does not see US voters as having been fooled by either the lobbyists or movements such as the Tea Party and the various kinds of Christian fundamentalism that try to provide mass movements to support some of their causes. Repeatedly he shows how opinion-poll evidence points to a public critical of unchecked corporate power and the truly extraordinary levels of material inequality that it has produced. But public opinion is unable to translate itself into influence in Washington, because the lobbyists and their party donations there rule more or less unchallenged.
Sachs shows how the US political system enables corporations and wealthy individuals to wield an influence that is not (yet) equalled in most other democratic countries. And using his economist's skills he shows how, despite its ostensible favouring of the free market, such an arrangement hurts the public interest. An outside reader, less caught up in the midst of the misuse of economics that lies at the heart of much of what has happened, especially around the financial crisis, may wish for a more moderate tone and at times tighter language. Sometimes points are better made when understated; and points that cannot be fully referenced and justified may be better left unmade, lest they weaken the impact of those that are fully documented. But this may be difficult for someone who has spent 40 years at the heart of the US economics profession, and who now sees the values that he thought the US economic way represented being abused and misused. In this context, the moral passion that informs Sachs' writing may be considered by many readers to add force and strength to his arguments. Here is someone fully trained, experienced and renowned in the cool, non-judgemental practices and language of modern science, who finds it necessary to step out from that frame and speak in ethical terms. This is, in itself, a powerful comment on our times.
I have been referring primarily to the first part of the book, "The Great Crash", which moves from an account of the financial crisis itself to other manifestations of a dangerously unsatisfactory economy in, for example, deteriorating work-life balance, reduced concentration spans and weaker educational performance. In a second part, "The Path to Prosperity", Sachs turns his attention to routes out from the predicament, where he makes radical but entirely feasible proposals for creating a more soundly based economy, more effective government and a better society. While this is mainly directed at US readers, there are many warning signals for others, including the British and other Europeans, who still tend to see the US economy as the summum bonum. Sachs would probably want to correct that to British and other European elites, who envy the inequalities of wealth and political influence that their opposite numbers in the US tend to enjoy. He is inclined to see Europe through starry eyes, generalising somewhat from Scandinavian experience. He was probably also writing too early to see how the reactions to the crisis of the European Central Bank are creating, in much of Europe, precisely the low-tax, low public spending, bank-protecting regime that he sees as partly responsible for the US crisis.
But let these reservations not detract from a fine and timely book. And non-economists should not be deterred by the author's technical reputation: the book is thoroughly readable and accessible.
The Price of Civilization: Economics and Ethics after the Fall
By Jeffrey Sachs
Bodley Head, 352pp, £20.00
Published 6 October 2011