Book Su2004 composite...Victoria Hattam, Kwame A. Appiah, Ian Haney-Lopez, Melissa Nobles, and Kim...

coming up in Dædalus:

Sanford Levinson Torture in Iraq 5

John Gray An illusion with a future 10

Joseph E. Stiglitz Evaluating economic change 18

Richard A. Shweder George W. Bush & the missionary position 26

Sakiko Fukuda-Parr Human development today 37

Charles Larmore History & truth 46

Keith Michael Baker On Condorcet 56

Condorcet From ‘The Progress of the Human Mind’ 65

John Steinbruner& Nancy Gallagher Prospects for global security 83

Richard Wilbur Green 104

Roxana Robinson Blind Man 105

Alan P. Boss on the search for extrasolar planets 116

Michael Kremer on how to improve world health 120

DædalusJournal of the American Academy of Arts & Sciences

Summer 2004

comment

on progress

poetry

½ction

notes

Dæ

dalusSum

mer 20

04: on progress

U.S. $13www.amacad.org

Howard Gardner, Lee Shulman, William Sullivan, Geoffrey GaltHarpham, Jeanne Nakamura & Mihaly Csikszentmihalyi, WilliamDamon, Anne Colby, Kendall Bronk & Thomas Ehrlich, andHarvey Goldman

Steven Pinker, Richard Rorty, Jerome Kagan, Richard Wrangham,Patrick Bateson, Jonathan Haidt, Donald Brown, Matt Ridley, andVernon Smith

on human nature

Kenneth Prewitt, Orlando Patterson, George Fredrickson, IanHacking, Jennifer Hochschild, Glenn Loury, David Hollinger, Victoria Hattam, Kwame A. Appiah, Ian Haney-Lopez, MelissaNobles, and Kim Williams

on race

on imperialism Niall Ferguson, Kenneth Pomeranz, Anthony Pagden, Jack Snyder,Akira Iriye, Molly Greene, William Easterly, Robin Blackburn, andHenk Wesseling

plus poetry by Geoffrey Hill, Rachel Hadas, Franz Wright, W. S.Merwin, Charles Wright, Peg Boyers &c.; ½ction by Victor LaValle,Sigrid Nunez, Margaret Atwood, R. Edmund &c.; and notes byMichael Wood, Charles Altieri, Donald Green, Shelley Taylor,Robert Nagel, Philip L. Quinn, Lynn Margulis, Hue-Tam Ho Tai,Peter Hohendahl, Allan Basbaum, Morris E. Fine, Rita Colwell &c.

on professions& professionals

Antonio & Hanna Damasio, A. S. Byatt, Carol Gilligan, GeraldEdelman, Jorie Graham, Richard Davidson, Raymond Dolan &Arne Öhman, and Mark Johnson

on body in mind

Henry J. Aaron, Paul Baltes, Frank Kermode, Linda Partridge,Dennis J. Selkoe, Caleb E. Finch, Sarah Harper, Chris Wilson,Jagadeesh Gokhale & Kent Smetters, Hillard Kaplan, and LisaBerkman

on aging

dstern

dstern

dstern

Doubts about the legal and morallegitimacy of American interrogationpractices in the war on terror ½rstemerged in regard to Afghanistan. InJanuary of 2003, for example, The Econ-omist published a remarkable set of arti-cles on torture, detailing some of Amer-ica’s more dubious practices. Yet as theeditors of The Economist noted, withinthe United States itself the discussion oftorture was “desultory.”

That all changed in May of 2004, when the cbs television program 60Minutes and The New Yorker released pho-tographs from the Abu Ghraib prison inIraq. These pictures provoked world-wide outrage and, even more important-ly, sparked a long overdue public debatein the United States about torture andthe permissible limits of interrogation in the aftermath of the September 11attacks.

As one might expect in a legalistic cul-ture such as ours, some of this debatehas revolved around the de½nition oftorture itself. Common lay understand-ings of torture are in fact quite differentfrom those articulated by many Amer-ican lawyers. One reason is that the U.S.

Senate, when ratifying in 1994 theUnited Nations Convention AgainstTorture and Other Cruel, Inhuman, orDegrading Treatment or Punishment,offered what one might call a more‘interrogator-friendly’ de½nition of tor-ture than that adopted by the un nego-tiators. Thus the Senate, as is its preroga-tive, stipulated while consenting to theConvention that

the United States understands that, in or-der to constitute torture, an act must bespeci½cally intended to inflict severe physicalor mental pain or suffering and that men-tal pain or suffering refers to prolongedmental harm caused by or resulting from:the intentional infliction or threatenedinfliction of severe physical pain or suffer-ing; the administration or application, orthreatened administration or application,of mind-altering substances or other pro-cedures calculated to disrupt profoundly thesenses or personality; the threat of immi-nent death; or the threat that another per-son will imminently be subjected to death,severe physical pain or suffering, or theadministration or application of mind-altering substances or other procedurescalculated to disrupt profoundly the sensesor personality. (emphases added)

Each and every term I have italicizedhere in the 1994 Senate resolution wasdiligently parsed in the recently dis-closed Pentagon “Working Group Re-port on Detainee Interrogations in theGlobal War on Terrorism,” submitted inMarch of 2003 to Secretary of DefenseDonald Rumsfeld. Given the Senate’s

Dædalus Summer 2004 5

Sanford Levinson, a Fellow of the AmericanAcademy since 2001, is W. St. John Garwood andW. St. John Garwood, Jr. Centennial Chair inLaw and professor of government at the Univer-sity of Texas at Austin. He is the author of “Con-stitutional Faith” (1988) and “Written in Stone”(1998) and the editor of “Torture: A Collection”(2004).

Comment by Sanford Levinson

Torture in Iraq & the rule of law in America

© 2004 by the American Academy of Arts & Sciences

highly quali½ed endorsement of the unConvention, it is not at all surprisingthat the report submitted to Rumsfeldappears to have maximized the scope ofauthority (and power) allowed Ameri-can interrogators who wish to operatewithin the law.

The Pentagon report closely followedan analysis submitted to White HouseCounsel Alberto Gonzales in 2002 by theOf½ce of Legal Counsel (olc) within theJustice Department. According to theolc, “acts must be of an extreme natureto rise to the level of torture . . . . Phys-ical pain amounting to torture must beequivalent in intensity to the pain ac-companying serious physical injury,such as organ failure, impairment ofbodily function, or even death.” Theinfliction of anything less intense thansuch extreme pain, according to JayBybee, then head of the olc (and now afederal judge on the Ninth Circuit Courtof Appeals), would not, technicallyspeaking, be torture at all. It wouldmerely be inhuman and degradingtreatment, a subject of little apparentconcern to the Bush administration’slawyers.

The current debate has sometimesgone beyond terminological quibbles. Inthe past few months, some experts haveforthrightly defended the propriety oftorture, however de½ned, at least insome very limited situations. HarvardLaw professor Alan Dershowitz, who hastaken such a position, nonetheless is ex-tremely concerned to minimize the useof torture. He has, therefore, vigorouslydefended the idea that the executivebranch should be forced to go to inde-pendent judges in order to obtain “tor-ture warrants,” which could be issuedonly after careful examination of execu-tive branch arguments as to the ostensi-ble necessity of torture in a given in-stance.

Still other experts, including Dersho-witz’s Harvard colleague Philip Hey-mann and U.S. federal judge RichardPosner, have disagreed, arguing thatsuch warrants would inevitably provechimerical as a genuine control andwould instead normalize torture as aninterrogational tool. Perhaps torture isproper under very restricted circum-stances, as Posner in particular agrees,but far better that it be defended ex post(after the fact) through speci½c claims of necessity or self-defense than ex ante(before the fact) through the issuing ofa warrant.

This debate has been informed both by current events and, for some, by theviews of the men who drafted the U.S.Constitution. On the one hand, there is a growing sense (articulated by writerslike Philip Bobbitt) that war in the fu-ture, at least where the United States isconcerned, is unlikely to ½t the tradi-tional pattern of threats by states, and isfar more likely to involve threats fromorganizations that have no capitals atwhich traditional retaliation can be di-rected.1 Rules and understandings devel-oped to constrain the conduct of warsbetween states–where, among otherthings, mutual self-interest dictates lim-its on what can be done even to one’senemies–may be inadequate or even, as suggested by White House CounselGonzales in a memorandum to the presi-dent, “obsolete” in regard to the so-called asymmetric warfare of thetwenty-½rst century. Such new modesof warfare require that we rethink ourbasic approach to waging war–and alsothe basic principles of law and morality.

On the other hand, it is equally impor-tant to grasp just what the basic princi-

6 Dædalus Summer 2004

Comment bySanfordLevinson

1 See Philip Bobbitt’s magisterial study, TheShield of Achilles: War, Peace, and the Course ofHistory (New York: Knopf, 2002).

ples of law and morality have been in theUnited States. As recent work on the ori-gins of the U.S. Constitution has demon-strated, the founding fathers hoped tocreate a government strong enough todefend the fledgling nation against itsmany potential enemies, including European powers as well as Indian tribesmuch closer to home.2 Among the keyprovisions of the 1787 Constitution werethose authorizing a standing army andeffectively unlimited taxing authority to Congress to pay for “the commondefense.”

James Madison and Alexander Hamil-ton, for all their notable differences,seemed to be in agreement on the im-portance of this point. Thus Madison,in Federalist No. 41, asked if it was “nec-essary to give [the new government] anindefinite power of raising troops,as well as providing fleets; and of main-taining both in peace as well as inwar?” He believed that the answer was“so obvious and conclusive as scarcely to justify” any real discussion of anti-Federalist criticisms of the very idea of astanding army. The United States had tostructure its own policies by anticipatingthe likely actions of other states: “Themeans of security can only be regulatedby the means and the danger of attack.They will, in fact, be ever determined bythese rules and by no others.” Hamiltonexpressed a related conviction in Federal-ist No. 23: “[I]t must be admitted as anecessary consequence that there can beno limitation of that authority which is toprovide for the defense and protection ofthe community in any matter essential

to its ef½cacy–that is, in any matteressential to the formulation, direction, orsupport of the national forces” (½rstemphasis added). Thomas Hobbes couldhave done no better in defending theabsolute authority of the sovereign.

The Constitution may proclaim thatsovereignty rests with “We the People.”But the implication of both Madison’sand Hamilton’s arguments is that, prac-tically speaking, at least in times of war,sovereignty really rests with a handful ofgovernment of½cials–not with “thePeople.”

Now consider the following maxim:“There exists no norm that is applicableto chaos.” It comes not from Madisonor Hamilton, but from Carl Schmitt, theleading German philosopher of law dur-ing the Nazi period. Schmitt contendedthat legal norms were only applicable instable and peaceful situations–and notin times of war, when the state confront-ed “a mortal enemy, with the threat ofviolent death at the hands of a hostilegroup.” It follows that conventional le-gal norms are no longer applicable in astate of emergency, when war and chaospose a standing threat to public safety.To adopt the language of American con-stitutional law, every norm is subject tolimitation when a compelling interest issuccessfully asserted, and it is hard tothink of a more compelling interest thanthe prevention of violent death at thehands of a hostile group.

But what this means is that one cannever have con½dence that any particu-lar constitutional norm–beyond that ofpreserving the state itself–will be ad-hered to. Any attempts within the Con-stitution to tie the government’s handswith regard to defending the nation,then, may be mere “parchment barri-ers,” to use Madison’s dismissive term(which he conceived during the period


Torture inIraq & therule of lawin America

2 See particularly David C. Hendrickson, PeacePact: The Lost World of the American Founding(Lawrence: University of Kansas Press, 2003);and Max M. Edling, A Revolution in Favor of Gov-ernment: Origins of the U.S. Constitution and theMaking of the American State (Oxford: OxfordUniversity Press, 2003).

when he doubted the wisdom of addinga Bill of Rights to the Constitution).Both Madison and Schmitt suggest,then, the most likely response to suchbarriers is a “necessary usurpation ofpower” (as Madison put it in FederalistNo. 41; emphasis added).

Schmitt, described by Herbert Mar-cuse as the most brilliant Nazi theorist,may have much to tell us about the legalworld within which we live and, evenmore certainly, seem to be careening.Although some analysts have suggestedthat the Bush administration has operat-ed under the guidance of the ideas ofGerman émigré Leo Strauss, it seems farmore plausible to suggest that the trueéminence grise of the administration, par-ticularly with regard to issues surround-ing the possible propriety of torture, isSchmitt.

September 11, it is said, changed every-thing. What this means, among otherthings, is that for many the existingworld of ‘the normal’ vanished in aninstant, to be replaced by the specter ofterrorist groups armed with weapons ofmass destruction. And what this means is that pre–September 11 norms and ex-pectations are being recon½gured interms of this new ‘normality’ of endless,frightening threats posed by ‘a mortalenemy.’ Ordinary norms–whether theassumption that anyone arrested byAmerican police will have an opportu-nity to consult with a lawyer, or the as-sumption that the United States will befaithful to its public pronouncementsdenouncing torture (as well as to itscommitment under the un Conventionabsolutely to refrain from torture what-ever the circumstances)–are now up forgrabs. “Sovereign is he,” wrote Schmitt,“who decides on the state of the excep-tion,” or, much the same, who is allowedto redescribe what is ‘normal.’

Administration lawyers whose memo-randa have only recently been disclosed

seem completely willing to view GeorgeW. Bush as the de facto sovereign. Theirdocuments display what can only becalled contempt not only for interna-tional law, but also for the very idea thatany other institution of the Americangovernment, whether Congress or theJudiciary, has any role to play. Thus boththe Working Group Report submitted toSecretary Rumsfeld and the memoran-dum prepared earlier by the olc arguedthat the Constitution’s designation ofthe president as commander in chiefmeans that “the President enjoys com-plete discretion . . . in conducting opera-tions against hostile forces” (emphasisadded). Complete discretion, of course,is a power enjoyed only by sovereigns.Non-sovereigns, by de½nition, are sub-ject to the constraint of some overridingauthority. The president, according toadministration lawyers, has no authorityto which he must answer. Prohibitionsof international and domestic law re-garding the absolute impropriety of tor-ture simply do not apply to him. “In or-der to respect the President’s inherentconstitutional authority to manage amilitary campaign, [federal laws againsttorture] must be construed as inapplica-ble to interrogations undertaken pur-suant to his Commander-in-Chief au-thority,” the olc advised. “Congresslacks authority . . . to set the terms andconditions under which the Presidentmay exercise his authority as Comman-der-in-Chief to control the conduct ofoperations during a war.”

It is impossible to predict whether these quite astonishing arguments(which seem to authorize the presidentand designated subordinates simply tomake disappear those they deem adver-saries, as happened in Chile and Argenti-na in what the Argentines aptly labeledtheir “dirty war”) would prevail before acourt of law. We shall know more after


Comment bySanfordLevinson

the Supreme Court rules in several casesit heard in the spring of 2004 regardingthe detention in Guantanamo of foreigncombatants and at least one Americancitizen (Jose Padilla, who has been ac-corded almost no legal rights since his2002 arrest at O’Hare International Air-port).

Far more important, however, is thearticulation, on behalf of the Bush ad-ministration, of a view of presidentialauthority that is all too close to the pow-er that Schmitt was willing to accord hisown Führer.

One temptation is to stop right here,especially if one shares my own doubtsabout both George W. Bush and the warin Iraq. But that would be too easy, for anumber of reasons. One is that there aremortal enemies of the United States whodo threaten violent death. No politicalleader could suggest that it is not a com-pelling interest to prevent future replica-tions of September 11. Moreover, as al-ready indicated, one can cite not onlythe egregious (though brilliant) Schmitt,but also such American icons as Madi-son and Hamilton for views that are notreally so completely different from thoseenunciated by the Bush administration.

And so we already have many well-credentialed lawyers, several of themdistinguished legal academics, who arequick to defend everything that is beingdone (or proposed) by the Bush admin-istration as passing constitutional mus-ter. They have enlisted in defending awar on terror that is almost certainly ofin½nite duration. They appear recklesslyindifferent to the fact that their argu-ments, if accepted, would transform theUnited States into at least a soft versionof 1984, where our own version of BigBrother will declare to us who is our en-emy du jour and assert his own version ofa “triumph of the will” to do everythingand anything–including torture–inorder to prevail.

A ½nal quotation from Carl Schmitt isilluminating: “A normal situation has tobe created, and sovereign is he who de-½nitively decides whether this normalstate actually obtains. All law is ‘situa-tion law.’ The sovereign creates andguarantees the situation as a whole in its totality. He has the monopoly on thisultimate decision.” This is precisely theargument being made by lawyers withinthe Bush administration.

The debate about torture is only onerelatively small part of a far more pro-found debate that we should be havingduring this most important of electionyears. Do “We the People,” the ostensi-ble sovereigns within the American sys-tem of government, accept the vision ofthe American president articulated bythe Bush administration? And if we do,what, then, is left of the vaunted visionof the rule of law that the United Statesostensibly exempli½es?

– June 21, 2004


Torture inIraq & therule of lawin America


Questioning the idea of progress at thestart of the twenty-½rst century is a bitlike casting doubt on the existence of theDeity in Victorian times. The stock reac-tion is one of incredulity, followed byanger, then moral panic. It is not somuch that belief in progress is unshak-able as that we are terri½ed of losing it.

The idea of progress embodies thefaith–for it is a faith, not the result ofany kind of empirical inquiry–that theadvance that has occurred in science canbe replicated in ethics and politics. Theline of reasoning proceeds as follows:Science is a cumulative activity. Todaywe know more than any previous gener-ation, and there is no obvious limit towhat we may come to know in the fu-ture. In the same way, we can inde½nite-ly improve the human condition. Just ashuman knowledge continues to increase

beyond anything dreamt of in earliertimes, the human condition can be bet-ter in the future than it has ever been inthe past.

This is a very recent creed. Nothinglike it existed before it emerged in Eu-rope around two centuries ago. Yet todayit seems to have become indispensable.No one imagines progress to be inevita-ble, but to deny that it is possible seemstantamount to snuf½ng out all hope. Interms of mass killing of humans by hu-mans, the twentieth century was theworst in history; but surely–it will beobjected–we must believe that suchhorrors can be avoided in the future.How else can we go on?

To reject the very idea of progressmust appear extreme, if not willfullyperverse. Yet the idea is found in none ofthe world’s religions and was unknownamong the ancient philosophers. ForAristotle, history was a series of process-es of growth and decline no more mean-ingful than those we observe in the livesof plants and animals. Early modernthinkers such as Machiavelli and somethinkers of the Enlightenment sharedthis view. David Hume believed that his-tory is cyclical, with periods of peaceand freedom being regularly followed bywar and tyranny. For the great Scottishskeptic, the oscillation between civiliza-

John Gray

An illusion with a future

John Gray is professor of European thought atthe London School of Economics. The author ofmany books on political theory, he is a regularcontributor to “The New Statesman” and “TheIndependent.” His most recent books are “StrawDogs: Thoughts on Humans and Other Animals”(2002), “Al Qaeda and What It Means To BeModern” (2003), and “Heresies: Against Prog-ress and Other Illusions” (2004).


tion and barbarism was coeval with hu-man history; in ethical and politicalterms the future was bound to be muchlike the past. The same view is found inHobbes, and even Voltaire was at timesinclined to it.

These thinkers never doubted thatsome periods of history are better thanothers. None of them was tempted todeny the fact of improvement, where itexisted; but they never imagined it couldbe continuous. They knew there wouldbe times of peace and freedom in the fu-ture, as there had been in the past; butthey believed that what was gained inone generation would surely be lost inanother. They believed that in ethics andpolitics there is no progress, only recur-ring gain and loss.

This seems to me to be the lesson ofany view of the human prospect that isnot befogged by groundless hopes. Prog-ress is an illusion–a view of human lifeand history that answers to the needs ofthe heart, not reason. In his book TheFuture of an Illusion, published in 1927,Freud argued that religion is an illusion.Illusions need not be all false; they maycontain grains of truth. Even so, they arebelieved not because of any truth theymay contain, but because they answer tothe human need for meaning and conso-lation.

Believers in progress have identi½ed afundamental truth about modern life–its continuous transformation by sci-ence; but they have invested this un-doubted fact with hopes and values in-herited from religion. They seek in theidea of progress what theists found inthe idea of providence–an assurancethat history need not be meaningless.Those who hold to the possibility ofprogress insist that they do because his-tory supports it. They cling to it becauseit allows them to believe that history canbe more than a tale told by an idiot.

If today life without the possibility ofprogress seems insupportable, it is worthasking how this state of affairs has comeabout. Most human beings who haveever lived lacked any such hope, and yeta great many of them had happy lives.Why are we so different?

The answer lies in our history. Themodern faith in progress is the offspringof a marriage between seeming rivals–the lingering influence of Christian faithand the growing power of science–inearly-nineteenth-century Europe. Fromthe eschatological hopes of Christianitywe inherit the belief that meaning andeven salvation can be found in the flux ofhistory. From the accelerating advanceof scienti½c knowledge we acquire thebelief in a similar advance by humanityitself.

From one angle, the idea of progress isa secular version of Christian eschatol-ogy. In Christianity, history cannot besenseless: it is a moral drama, beginningwith a rebellion against God and endingwith the Last Judgment. Christianstherefore think of salvation as a histori-cal event. For Hindus and Buddhists, onthe other hand, it means liberation fromtime. It meant the same in Mithraism–a mystery cult that for a time among theRomans rivaled Christianity. Thus themystical vision of liberation from timeentered deeply into European philoso-phy, with Plato af½rming that only eter-nal things can be fully real. History was a realm of illusions, a dream or a night-mare from which the wise seek to awaken.

Before the coming of Christianity itwas taken for granted that history iswithout meaning. True, the belief thatGod reveals himself in history can befound in the Old Testament, but it is areading of the history of the Jewish peo-ple, not of that of the species. It was onlyafter Saint Paul turned the teaching of

Anillusionwith afuture



John Grayon progress

Jesus into a universal religion that theOld Testament was interpreted as an ac-count of history as a whole. This moveto universalism is commonly seen as amajor advance, but I am unconvinced.The political religions that wrought suchhavoc in the twentieth century were sec-ular versions of the Christian promise ofuniversal salvation. A world withoutsuch transcendent political hopes wouldstill have suffered from ethnic and reli-gious violence; but mass murder wouldnot have been committed with the aimof perfecting humanity.

The role of eschatological beliefs inmodern political movements has notbeen much studied. Amongst analyticalphilosophers, ignorance of religion is apoint of professional honor, while socialscience continues to be dominated bytheories of secularization that were falsi-½ed generations ago. Yet the connectionbetween Christian eschatology andmodern revolutionary movements hasnot gone entirely unnoticed. It is thecentral theme of Norman Cohn’s book,The Pursuit of the Millennium: Revolution-ary Millenarians and Mystical Anarchists ofthe Middle Ages. First published in 1957,Cohn’s masterly study is indispensableto understanding twentieth-century politics.

The late medieval movements Cohndescribes held to a radical version of theChristian eschatology: the old world wascoming to an end, and a new one wascoming into being without any of theflaws that had dis½gured human societythroughout history. The same view ofhistory and the human future was repro-duced in modern radical ideologies.Cohn’s mystical anarchists believed that God would bring about this trans-formation in human affairs. Bakunin and Marx believed–even more incredi-bly–that humankind could do so unaid-ed. A similar fantasy animated Fukuya-

ma’s absurd announcement of the end ofhistory.

It is no accident that Europe is thebirthplace of Marxism, and America ofneoliberalism. Neither could have aris-en, or even be fully understood, outsidea culture pervaded by the belief that sal-vation is an event in history. Modernprojects of universal emancipation areearthly renditions of the Christianpromise of salvation.

In contrast, the pagan world was re-markable for the extreme modesty of itshopes. For Marcus Aurelius and Epicu-rus, the good life would always remainthe privilege of a few. The notion thatthe mass of humanity could be saved–orwas worth saving–was unknown. Onlywith Christianity did the notion enterEuropean antiquity that all humankind

–or all of it that accepted the Christianmessage–could be saved. In holding outthe prospect of an improvement in thehuman condition, secular humanistsare renewing the vast hopes kindled byChristianity in the ancient world.

Although–unlike Bakunin, Marx, andFukuyama–they don’t proclaim an endof history, most of our secular humanistsdo look forward to a better world thanany that history records. The catastro-phes of the twentieth century may havetaught them social progress is a matterof inching along rather than of greatleaps forward, but they continue to be-lieve that human action can remake theworld. The method may be piecemealsocial engineering rather than–as inMarx or Bakunin–revolutionary trans-formation; but the aim is the same.

The current conception of progress is a secular religion, but it has another andno less important source in science. In-termittent throughout most of history,the growth of human knowledge is nowcontinuous and accelerating. Short of a

catastrophe greater than any that can berealistically imagined, the advance ofscience is unstoppable. This fact is thesecond source of the modern faith inprogress.

The reality of scienti½c progress isdemonstrated by increasing humanpower. There are more humans alivetoday than ever. The face of Earth isbeing transformed by human expansion.Unnumbered species of flora and faunaare being driven into extinction, and theglobal climate is changing. The root ofthis increase in human power is thegrowth of human knowledge. Philoso-phers may dispute the validity of scien-ti½c knowledge; cultural anthropologistsmay represent science as one belief sys-tem among others–yet, faced with thefact of growing human power, skepti-cism about the validity of scienti½cknowledge is pointless.

Still, there is loss as well as gain in theadvance of science. There is no built-inharmony between human well-beingand the growth of knowledge. The mostpredictable by-product of scienti½cprogress, for instance, is an increase inthe intensity of war. The long-term im-pact could be to make Earth uninhabit-able to humans. Even so, it is frivolous todeny scienti½c progress–as some post-modernist thinkers seem to want to do.The error in the dominant modernworldview is not that it af½rms progressin science to be a reality when it is not.Rather, its mistake is to imagine that theprogress that has occurred in science canbe replicated in other areas of humanlife. Human knowledge changes, but hu-man needs stay much the same. Humansuse their growing knowledge to satisfytheir conflicting needs. As they do, theyremain as prone to frailty and folly asthey have ever been.

To question the idea of progress is notto cast doubt on the improvements that

have actually occurred. Nor does it entailrejecting the reality of universal humanvalues. There are postmodernist thinkerswho maintain that we cannot pass moraljudgments on other cultures and epochs:there are only different forms of life,each with its own ideals and standards.If this were so, it would make no senseto evaluate history in terms of progress

–or decline. Ethics would be like art, inwhich judgments can be made regardingprogress and decline within particulartraditions, but not between traditionswhose styles vary widely. Lacking uni-versal standards, there would be no wayto judge that one culture or period in his-tory was an improvement on any other.

There are af½nities between art andethics. The notion that one way of lifecould be best for everybody is like sayingthat one style of art could be better thanevery other. That is obviously absurd,but it does not mean we cannot judgedifferent cultures and eras. No way oflife is best for everybody, but some arebad for everyone.

For humans as for other animals thereare species-wide goods and evils. Draw-ing up a list is not easy, but fortunatelythat is not necessary. As soon as we ½nda value that looks universal, we see thatit clashes with other, equally universalvalues. Justice clashes with mercy, equal-ity with excellence, personal autonomywith social cohesion. Freedom from ar-bitrary power is a great good–but so isthe avoidance of anarchy. Moreover,goods may rest on evils: peace on con-quest, high cultural achievement ongross inequalities. There is no naturalharmony among the goods of humanlife.

Conflicts among basic human valuesdo not arise only in extreme situations.In good times they may be masked, butthey flow from the endemic conflicts ofhuman needs, and they are permanent.





Ethics and politics are practical skillsthat humans have devised to cope withthese conflicts. Unlike scienti½c knowl-edge, the skills of ethics and politics arenot easily transmitted. They have to belearnt afresh with each new generation,and they are easily lost.

Humans are intensely curious, butthey fear the truth; they long for peace,but they are excited by violence; theydream of a world of harmony, but theyare at war with themselves. Despite tire-less efforts to show that their values co-here in a single vision of the good, theydo not and never will. Each value ex-presses an enduring human need butclashes with other human needs, equallyurgent and no less permanent.

The perception that humans are some-how radically defective appears in themyths of cultures separated by longstretches of time and space. Formulatedin the doctrine of Original Sin, humanimperfectability is expressed most pow-erfully in the biblical myth of the Fall. In the form of an assertion of ingrainedhuman delusion, it is also found in Hin-duism and Buddhism. It forms part ofwhat may be called a human orthodoxy,which recognizes that the human animalis incorrigibly flawed.

In contrast, secular humanists believethat the growth of knowledge can some-how make humans more rational. FromAuguste Comte and John Stuart Mill toJohn Dewey and Bertrand Russell, it hasbeen believed that progress in sciencewould be matched by progress in socie-ty. These thinkers accepted that if intel-lectual progress were to falter or stop,progress in society would cease too. Yetnone of them ever imagined that whilethe growth of knowledge continued toaccelerate, ethical and political life couldregress. Yet that was the reality duringmost of the last century, and there is no

reason to think the present reality willbe any different.

The most dangerous threats confront-ing us today are the results of the inter-action of expanding human knowledgewith unchanging human needs. Thespread of weapons of mass destructionis a response to intractable political con-flicts; but it is also a by-product of thediffusion of scienti½c knowledge. Sci-ence has enabled living standards to beraised in advanced industrial societies;but worldwide industrialization is trig-gering a struggle for the control of scarcenatural resources. It is the practical ap-plication of science that has made thepresent size of the human populationpossible; but the mix of populationgrowth with advancing industrializationis the human cause of climate change.Science brings knowledge, but knowl-edge is not an unmixed good. It can be as much a curse as a blessing.

This is a thought that goes very muchagainst the grain of Western philosophy,which, after all, was founded in the faiththat knowledge and virtue go together.Socrates was able to af½rm that the un-examined life is not worth living be-cause–in Plato’s account, at any rate–he did not doubt that the true and thegood are one and the same; that beyondthe shifting realm of the senses there isanother world in which all goods are rec-onciled in perfect harmony; that byknowing this other realm we can be free.This mystical faith pervades Westernphilosophy and underpins the moderncreed of progress, in which growingknowledge is seen as the pathway tohuman emancipation.

The myth of Genesis has a differentmessage. In the biblical story, the Fall ofMan follows his eating from the fruit ofthe tree of knowledge. The result is anintoxicating sense of power, accompa-

nied by all the ills that come whenflawed creatures use knowledge to pur-sue their conflicting ends. Greek mythteaches the same lesson when it tells ofPrometheus chained to a rock for steal-ing ½re from the gods. Knowledge is onething, the good life another.

The power of these myths comes from the insight that humanity cannotgo back. Contrary to the proclamationsof Rousseau and some Green thinkerstoday, we cannot revert to a simple life.Once we have eaten from the tree ofknowledge we must somehow cope with the consequences.

The core of the idea of progress is theillusion that knowledge enhances hu-man freedom. The reality is that it mere-ly increases human power. Science can-not end history; it can only add another,extremely potent ingredient to history’scontinuing conflicts. This is the truthintimated in the biblical myth and dem-onstrated in the history of the twentiethcentury.

Despite the evidence of experience,progress has had many evangelists overthe past two hundred years. In their dif-ferent ways, Hegel and Marx, Bakuninand Mill, Popper and Hayek, Habermasand Fukuyama all preach the same faith:knowledge is liberating; science can beused to create a world better than anyhistory has known. But the most suc-cessful propagandists for the idea ofprogress were the French positivistsHenri de Saint-Simon and AugusteComte, who in the ½rst half of the nine-teenth century developed a cult–theReligion of Humanity, as they called it–that offered salvation through science.

Positivism is a complex body of ideas,but the tenet of the positivist creed thatis relevant to my present theme is thebelief that the growth of scienti½cknowledge enables the intractable con-flicts of history to be left behind. Saint-

Simon and Comte believed that with theadvance of knowledge, ethics and poli-tics could become sciences. Once thedebris of metaphysics and religion hadbeen cleared away, science would be thesource of our view of the world. A newterrestrial morality–a scheme of valueshaving the authority of science–wouldbe formulated. Applying this new moral-ity, science could bring into being a glob-al civilization without poverty or war, inwhich the conflicts of the past would beonly memories.

Unlike many who were influenced bytheir ideas, the positivists did not thinkthat religion would disappear in the newworld. They recognized that it answeredto enduring human needs, and they setabout devising a new faith: a bizarre but,for a time, hugely successful cult, withits own priesthood and liturgy, daily ob-servances based on the ‘science’ of phre-nology, and even a special sort of cos-tume fashioned–with buttons sewn upthe back so that dressing and undressingcould only be done with the help of oth-ers–to promote social cooperation.

The Religion of Humanity is a ridicu-lous confection, but the central ideas ofthe positivists have had an enormousinfluence. J. S. Mill, Karl Marx, and Her-bert Spencer are only a few of the nine-teenth-century thinkers who absorbedthe positivist belief that science wouldenable the abolition of poverty and war.Lenin’s project of a stateless socialistsociety was an echo of Marx’s formulathat when communism is achieved thegovernment of men will be replaced bythe administration of things–a formulaMarx owed (via the French utopian so-cialist Louis Blanc) to Saint-Simon. Atthe end of the twentieth century, thepositivist belief that the diffusion of sci-ence and technology would engender auniversal civilization resurfaced in theneoliberal cult of the global free market.





Now, as in the past, the Enlightenmentideal of a universal civilization has trig-gered a violent backlash. In the late eigh-teenth and early nineteenth centuries,romantic and Counter-Enlightenmentthinkers such as J. G. Herder and Josephde Maistre proclaimed the value of faithand the singularity of cultures. In thetwentieth century, the Nazis exalted raceand instinct. Today religious fundamen-talists seek to resist the advance of sci-ence by returning to a prelapsarian con-dition of doubt-free innocence. Suchmovements claim to reject the modernworld and the faith in progress thatdrives it, but a little examination showsthis to be self-deception.

The Nazis certainly rejected Enlight-enment values of human equality, per-sonal liberty, and toleration; but theyaf½rmed the Enlightenment idea that anew humanity without the flaws of theold could be created. Comte’s project ofa science of sociology based on physiolo-gy was taken up by Cesare Lombroso,the founder of criminal anthropology,and later became an element in Nazi sci-enti½c racism. The Nazi conception ofprogress condemned much of humanityto slavery or extermination; it was notby accident that it produced the worstgenocide in history. Even so, the Nazisshared with the positivists the goal ofusing science to develop a new human-ity–a peculiarly modern project. WithNietzsche they shared the modern faiththat human life can be transformed byan act of will.

A similar belief is evident in radicalIslam. From its inception as a body ofthought in the mid-twentieth century,radical Islam has seen itself–and beenseen by others–as a profoundly anti-Western movement. But in fact many ofits themes have been borrowed fromradical Western thought. The idea thatthe world can be regenerated by spectac-

ular acts of violence echoes the ortho-doxy of French Jacobinism, nineteenth-century European and Russian anar-chism, and Lenin’s Bolshevism. Move-ments such as Nazism and radical Islamdo not offer an alternative to the modernfaith in progress but an exacerbation ofit.

Like older faiths, progress and the Re-ligion of Humanity are illusions. Butwhereas the illusions of older faithsembody enduring human realities, thefaith in progress depends on suppressingthem. It represses the conflicts of humanneeds and denies the unalterable moralambiguity of human knowledge.

Nothing is more commonplace thanthe insistence that what we do with sci-enti½c knowledge is up to us. But we–enlightened thinkers, friends of reasonand humanity–are few and feeble, andno doubt as deluded as the rest of thespecies, if not more so. The hopes towhich believers in progress cling areonly the values of their time and place,shifting eddies in the shallow current ofconventional opinion. Today bien-pensanteconomists are adamant that humanprosperity can only be secured by a uni-versal regime of free markets; a genera-tion ago they believed only managedmarkets could do the trick. A generationbefore that, many were missionaries forcentral planning. Current beliefs aboutfree markets and globalization are justthe latest in a series of intellectual fash-ions, each convinced of its ½nality, everyone of them superseded by events. Onlythose who are blessed with short memo-ries can believe that the history of ideasis a tale of progress.

Still, giving up the idea of progress is adrastic step. It may be an illusion, but ithas sometimes been a benign one.Would we have seen the abolition ofslavery, or the prohibition of torture,

without the hope of a better future? In-stead of giving up the idea of progress,why not suitably revise it?

There are alternative visions of prog-ress more attractive than the discrediteddogmas of the last twenty years. Like theMarxists of a couple of generations ago,neoliberals believe one economic systemis best everywhere. But the free market isnot the terminus of history; differentcountries with varying histories andpresent circumstances may need differ-ent economic arrangements. Again, neo-liberals follow Marxists in thinking ofeconomic development in terms ofincreasing human power over the natu-ral environment; but–as the formerSoviet Union demonstrated all too clear-ly–the end result of that approach isecological devastation. Neoliberals willinsist (they always insist) that free mar-kets can deal with natural scarcity; butWestern political leaders appear not toshare their con½dence. The last majorwar of the twentieth century–the GulfWar–was a conflict over the control ofoil. The present century looks as if it willcontain more conflicts of this kind–mainly over energy supplies, but alsofresh water. Rather than leave Earth’sdepleting natural resources to the vaga-ries of the price mechanism punctuatedby resource wars, would it not be betterto seek to moderate the human impacton the planet, and thereby foster a moresustainable kind of development?

I am sure it would be better if we had avision of progress that respected the lim-its of Earth. In other writings, I havetried to sketch some such view. Yet Ihave come to doubt that such theoreticalconstructions can ever prevail againstthe power of human passions. When vi-tal necessities appear threatened, hu-mans will act as they have always done:They will try to secure them now–evenif the result is war, and the ruin of all.Belief in progress is harmful because it

obscures these realities. Far more thanthe religions of the past, it clouds ourperception of the human condition.

In his great poem “Aubade,” PhilipLarkin wrote of religious faith as “thatvast moth-eaten musical brocade”–asystem of falsehoods contrived to shieldhumans from their fear of death. Hisdescription may once have containedsome truth, but it is better applied nowa-days to the secular faith in progress.Whatever their faults, traditional reli-gions are less fantastical. They maypromise a better world beyond the grave,but they do not imagine that science candeliver humanity from itself.

Can modern men and women do with-out the moth-eaten musical brocade ofprogressive hope? I think not. Faith inthe liberating power of knowledge isencrypted into modern life. Drawing onsome of Europe’s most ancient tradi-tions, and daily reinforced by the quick-ening advance of science, it cannot begiven up by an act of will. The interac-tion of quickening scienti½c advancewith unchanging human needs is a fatethat we may perhaps temper, but cannotovercome.

In time, no doubt, the religion of prog-ress will disappear, as the way of life itanimates fades from the world. Otherfaiths will appear, more or less remotefrom human realities, but equally irra-tional. Who now remembers Mithraism,or the curious faith of the Gnostics?These religions sustained and consoledmillions of people over many centuries,only to vanish almost without trace. Yetthose who hold to the possibility ofprogress need not fear. The illusion thatthrough science humans can remake theworld is an integral part of the moderncondition. Renewing the eschatologicalhopes of the past, progress is an illusionwith a future.




In recent years there have been enor-mous changes in our technology, oureconomy, and our society. But has therebeen progress?

From most economists the ½rst reac-tion to this question is: Of course theremust have been progress! After all, thegrowth of new technologies expandsopportunity sets, what we can do, theamount of output per unit input. We can choose either to have more output,more goods and services, or to work less.However we make the choice, surely weare better off.

But what, then, about the sweepingchanges we associate with the phenome-non of globalization? For several years I have been actively involved in debatesaround the world about the costs andbene½ts of this phenomenon. As a result

of globalization, the countries of theworld are more closely integrated.Goods and services move more freelyfrom one country to another. This is theresult of the lowering of transportationand communication costs throughchanges in technology, and of the elimi-nation or reduction of many man-madebarriers such as tariffs. The countriesthat have been most successful at bothincreasing incomes and reducing pover-ty–the countries of East Asia–havegrown largely because of globalization.They took advantage of global marketsfor their goods; they recognized thatwhat separates developed from less de-veloped countries is a disparity not onlyin resources but also in knowledge; theytapped into the pool of global knowledgeto close that gap; and most even openedthemselves up to the flow of internation-al capital.

But in the countries that have been lesssuccessful, globalization is often viewedwith suspicion. As I have argued else-where, there is a great deal of validity tothe complaints of those who are discon-tent. In much of the world, there hasbeen in recent years a slowing of growth,an increase in poverty, a degradation ofthe environment, and a deterioration ofnational cultures and of a sense of cul-tural identity. Globalization proves that

Joseph E. Stiglitz

Evaluating economic change

Joseph E. Stiglitz, a Fellow of the American Acad-emy since 1983, is University Professor at Colum-bia University. He won the Nobel Prize in eco-nomic science in 2001. His recent books include“Globalization and Its Discontents” (2002) and“The Roaring Nineties: A New History of theWorld’s Most Prosperous Decade” (2003). Heis indebted to the MacArthur, Mott, and FordFoundations for ½nancial support.


change does not invariably produceprogress.

In America we have also seen change,and seemingly at an ever faster pace–but here, too, it is not clear if mostAmericans are better off. Recent num-bers suggest that productivity growth isincreasing at the impressive speed ofover 4 percent per annum. Americanswho work are working longer hours,while more and more Americans are notworking: some are openly unemployed;some are so discouraged by the lack ofjobs that they have stopped looking (andtherefore are no longer included in theunemployment statistics); and somehave even applied for, and have begun to receive, disability payments that theywould not have sought had there been ajob available. Recent decades have seen a concomitant change in values. Fortyyears ago, the best graduating studentssought jobs in which they could work toensure the civil rights of all Americans,to ½ght the war on poverty both withinthe United States and abroad, or to pur-sue the advance of knowledge; in the1990s, the best students wanted jobs onWall Street or with the big law ½rms. Nodoubt this shift was brought about inlarge part by the disproportionate sala-ries of that decade; these seemed to say,in effect, how much more society valuedthe work of corporate executives overthat of the researchers whose high-tech,biotech, and Internet innovations helpedfuel the boom.

Many are concerned, moreover, by theseeming erosion of moral values, exhib-ited so strikingly in the corporate scan-dals that rocked the country in the lastfew years, from Enron to Arthur Ander-sen, from WorldCom to the New YorkStock Exchange–scandals that involvedvirtually all our major accounting ½rms,most of our major banks, many of our

mutual funds, and a large proportion ofour major corporations.

Of course, every society has its rottenapples.1 But when such apples are so pervasive, one has to look for systemicproblems. This seeming erosion of mor-al values is just one change (the increas-ing bleakness of the suburban landscapein which so many Americans live is an-other) that does not seem to indicateprogress.

How can this happen? How canimprovements in technology, whichseemingly increase opportunities, andtherefore should also increase societalwell-being, so often have adverse conse-quences, bringing about change that isnot progress? In the way that I haveposed the question, I have implicitlyde½ned what I mean as progress: animprovement in well-being, or at least in the perception of well-being. But thatbegs part of the question: whose well-being, and in whose perception?

An economy is a complicated system.The price of steel, for instance, dependson wages, interest rates, and the price ofiron ore, coke, and limestone. Each ofthese in turn depends on the prices ofother goods and services, in one vast,complicated, and interrelated system.The marvel of the market is that, some-how, it has solved this system of simulta-neous equations–solved it before therewere any computers that could even ap-proach a problem of such mathematicalcomplexity.

A disturbance to any one part of thesystem causes ripples throughout it.While improvements in technologyimprove opportunity sets and in princi-ple could make everyone better off, in

Evaluatingeconomicchange

1 See Joseph E. Stiglitz, The Roaring Nineties: ANew History of the World’s Most Prosperous De-cade (New York: W. W. Norton, 2003).



Joseph E.Stiglitzonprogress

practice they often do not. A change intechnology that enables a machine toreplace an unskilled worker reduces thedemand for unskilled workers, therebylowering their wages and increasingincome inequality. Poverty may alsoincrease. Of course, the gains of thosewho are better off may be greater thanthe losses of those who are worse off; if so, the government may tax the newgains and redistribute the proceeds tothose who lose, in such a way as to makeeveryone better off. Making everyonebetter off is what I mean by progress.

But ideology and interests may pre-clude that. Conservative philosopherswill say that it is the right of each indi-vidual to keep the produce of his ownefforts. But this is a misleading argu-ment, because the notion of individuallabor and effort is not well de½ned. Thetools and technology that an individualuses, for instance, are probably not theresult of his own labor. They may well bethe result instead of public expenditures,of the kind of government investmentsin research and technology that createdthe Internet. And, in the ½rst place, government-½nanced advances in bio-medical research may have resulted inthe individual even being alive and ableto produce anything at all.

Interests buttress ideologies. Whilesome conservatives may resort to philo-sophical arguments for why there shouldnot be redistribution, those at the top ofthe income distribution–who have seentheir incomes rise much in recent years –have a self-interest in arguing againstprogressivity. They are unlikely toapproach the question from any of theperspectives from which the issue ofsocial justice has been posed–such asthat of Rawls, who asks, in effect, whatwould be a fair tax system, were we tohave to decide such a question from be-hind a veil of ignorance, before we knew

whether we were to end up rich or poor,skilled or unskilled? But, of course, peo-ple know how the dice has been rolled,so they argue for what is right from theperspective of their current advantage.

Economists have traditionally beenloath to talk about morals. Indeed, tradi-tional economists have tried to arguethat individuals pursuing their self-inter-est necessarily advance the interests ofsociety. This is Adam Smith’s fundamen-tal insight, summed up in his famousanalogy of the invisible hand: Marketslead individuals, in the pursuit of theirown self-interest, as if by an invisiblehand, to the pursuit of the general inter-est. Sel½shness is elevated to a moralvirtue.

Much of the research of the two cen-turies following Smith’s original insighthas been devoted to understanding thesense in which, and the conditions underwhich, he was right. His insight grew in-to, among other things, the idea that thepursuit of self-interested pro½t-maxi-mizing activity leads to an economicef½ciency in which no one can be madebetter off without making someone elsebetter off. (This concept is called Pare-tian ef½ciency, after the great Italianeconomist Vilfredo Pareto.) It took along time before the assumptions under-lying the theory–perfect competition,perfect markets, perfect information,etc.–were fully understood.

By focusing on the consequences ofimperfect information, my own research(with Bruce Greenwald of ColumbiaUniversity) has challenged the Smithianconclusion.2 We have showed that wheninformation is imperfect, and especially

2 See, in particular, Bruce Greenwald andJoseph E. Stiglitz, “Externalities in Economieswith Imperfect Information and IncompleteMarkets,” Quarterly Journal of Economics 101 (2)(May 1986): 229–264.

when there are asymmetries of informa-tion (that is, different individuals know-ing different things), then the economyis essentially never Pareto ef½cient.Sometimes, in other words, the invisiblehand is not visible simply because it issimply not there. Markets do not lead toef½cient outcomes, let alone outcomesthat comport with social justice. As a re-sult, there is often good reason for gov-ernment intervention to improve the ef-½ciency of the market.3

Just as the Great Depression shouldhave made it evident that the marketoften does not work as well as its advo-cates claim, our recent Roaring Ninetiesshould have made it self-evident that thepursuit of self-interest does not neces-sarily lead to overall economic ef½cien-cy. The executives of Enron, Arthur An-dersen, WorldCom, etc. were rewardedwith stock options, and they did every-thing they could to pump up the price oftheir shares and maximize their own re-turns; and many of them managed tosell while the prices remained pumpedup. But those who were not privy to thiskind of inside information held on totheir shares, and when the stock pricescollapsed, their wealth was wiped out. AtEnron, workers lost not only their jobsbut their pensions. It is hard to see howthe pursuit of self-interest–the corpo-rate greed that seemed so unbridled–advanced the general interest.

Advances in the economics of infor-mation (especially in that branch thatdeals with the problem that is, interest-

ingly, referred to as ‘moral hazard’) helpexplain the seeming contradiction. Prob-lems of information mean that decisionsinevitably have to be delegated. Theshareholders have to delegate responsi-bility for making decisions, but theirlack of information makes it virtuallyimpossible for them to ensure that themanagers to whom they have entrustedtheir wealth and the care of the companywill act in their best interests. The man-ager has a ½duciary responsibility. He issupposed to act on behalf of others. It ishis moral obligation. But standard eco-nomic theory says that he should act inhis own interests. There is, accordingly, aconflict of interest.

In the 1990s, as I have argued else-where, such conflicts became rampant.Accounting ½rms that made more mon-ey in providing consulting services thanin providing good accounts no longertook as seriously their responsibility toprovide accurate accounts. Analystsmade more money by touting stocksthey knew were far overvalued than byproviding accurate information to theirunwary customers who depended onthem.

Consciences may be salved by the doc-trine that the pursuit of self-interest willin fact make everyone better off. But thepursuit of self-interest does not in gener-al lead to economic well-being, and soci-eties in which there are high levels oftrust, loyalty, and honesty actually per-form better economically than those inwhich these virtues are absent. Econo-mists are just beginning to discover hownon-economic values, or ‘good norms,’actually enhance economic perform-ance.

But some economic changes may cor-rode these values, for several reasons.We have already drawn attention to two:Such changes may produce new conflictsof interest and new contexts in which

3 Of course, it should have been obvious thatsomething was wrong with Smith’s conclu-sions. The Great Depression, during which avery large fraction of the country’s resourceswere left idle, at great social cost, seemed todemonstrate that sometimes the market econo-my did not work well. Nevertheless, supportersof free markets claimed that the Great Depres-sion was caused not by the failure of markets,but of government.





the pursuit of self-interest clashes withsocietal well-being. When people seeothers bene½ting from such conditions,a new norm of greed emerges. ceosdefend their rapacious salaries by refer-ring to what others are getting; someeven argue that such salaries are re-quired to provide them the appropriateincentives for making ‘the hard deci-sions.’

There is a third way in which econom-ic change may undermine norms, partic-ularly in developing countries. To bemaintained, norms have to be enforced;there have to be consequences for violat-ing them. Greater mobility typicallyweakens social mechanisms for theenforcement of norms. Even when thereis not greater mobility, greater societalchange and uncertainty results in put-ting less weight on the future, moreweight on the short-run bene½ts fromviolating a norm than on the long-runcosts. In many Western societies thisshift, with its increased emphasis on theindividual, has undermined many socialnorms, along with the sense of commu-nity.

Changes in technology, in laws, and innorms may all exacerbate conflicts ofinterest, and, in doing so, may actuallyimpair the overall ef½ciency of the econ-omy. The notion that change is necessar-ily welfare enhancing is typically sup-ported by the same simplistic notions,sometimes referred to as market funda-mentalism, that assert that markets nec-essarily lead to ef½cient outcomes. If theeconomy is always ef½cient, then anychange that increases the output per unitinput must enhance welfare. But if theeconomy is not necessarily ef½cient,then there can be changes that exacer-bate the inef½ciencies. For instance, thepresence of competition is one of therequirements for market ef½ciency; if

changes in technology result in one½rm’s dominating the market, compe-tition is reduced, and with it, welfare.

More generally, there is no theoremthat ensures the ef½ciency of the econo-my in the production of innovations.The theorems concerning the ef½ciencyof the economy are all predicated on theassumption that there is no change intechnology, or at least no change in tech-nology that is the result of deliberateactions on the part of ½rms or individu-als. In short, standard economic theoryis of little relevance in discussions aboutthe ef½ciency of markets in the produc-tion of knowledge. This itself shouldcome as no surprise, for knowledge canbe viewed as a special form of informa-tion, and the general result referred toearlier about the lack of ef½ciency ofmarkets with imperfect informationextends to this case.

To take another example, there havebeen notable innovations in ½nancialmarkets. These have some importantadvantages. For instance, they enablerisks to be shifted from those less able to bear them to those more able to do so. But some ½nancial innovations havemade it more dif½cult to monitor what a ½rm and its managers are doing, thusworsening the information problem.Many of these innovations were theresult of a corporate desire to minimizetax burdens; companies did not want to bear their fair share, so they devisedways of hiding, legally, income from thetax authorities. One of the big intellectu-al breakthroughs of the 1990s was therealization that these same techniquescould be used to provide distorted infor-mation to investors; costs could be hid-den, and revenues increased. With re-ported pro½ts thereby enhanced, shareprices also increased. But because shareprices were based on distorted informa-tion, resources were misallocated. And

when the bubble to which this misinfor-mation contributed broke, the resultingdownturn was greater than it otherwisewould have been.

Curiously, stock options, which under-lay many of these problems, were at onetime viewed as an innovation; they wereheralded as providing better incentivesfor managers to align their interests withthose of the shareholders. This argu-ment was more than a little disingenu-ous: in fact, the typical stock-optionpackage, especially as it was put intopractice, did not provide better incen-tives. While pay went up when stockprices went up, much of the increase inthe stock price had nothing to do withthe managers’ performance; it justreflected overall movements in the mar-ket. It would have been better to basepay on relative performance. Moreover,when, as in 2000 and 2001, share pricesfell, management pay did not fall. It sim-ply took on other forms. This is anotherexample of an innovation that was not,in any real sense, progress.

Now consider some examples of puta-tive reforms. Especially in the area ofeconomic policy, a combination of mis-guided economic analysis, ideology, andspecial interests often results in reformsthat are not, in fact, welfare enhancing–even though they are billed as progress.For instance, in Mexico tax revenues as ashare of gdp are so small that the publicsector cannot perform many of its essen-tial functions; there is underinvestmentin science and technology, education,health, and infrastructure. Among thereforms the Fox government has advo-cated are tax changes that would in-crease revenues–but whether society asa whole would bene½t depends in parton how the tax revenues are increased.Conservatives have long advocated thevat (a uniform tax, common in Europe,that is levied at each stage of produc-

tion), but within the Clinton administra-tion it was summarily dismissed becauseit is not a progressive tax, a matter ofparticular concern in a country like Mex-ico with such a high level of inequality.There were alternative proposals forraising taxes–such as on the pro½ts ofthe oligopolies and monopolies–thatwould have been more ef½cient andequitable.

Elsewhere, policies sold as ‘reform’–opening up markets to destabilizingspeculative short-term capital flows–have exposed countries to huge risks.The East Asian crisis of 1997, the global½nancial crisis of 1998, the Latin Ameri-can crises of recent years–all are at leastpartly attributable to these short-termflows. Just as there is no general theoremassuring us that changes in technologyproduced by the economy are welfareenhancing, so too there is no generaltheorem assuring us that the policy re-forms that emerge out of the politicalprocess–whether at the national or in-ternational level–are welfare enhanc-ing. There are, in fact, numerous analy-ses that suggest quite the opposite.

In economics, the dominant strand of thinking has evolved out of physics. And so economies are analyzed in termsof equilibrium. The consequence ofchange is to move an economy from oneequilibrium to another. Much of what Ihave said so far can be summarized asfollows: Once we recognize that theequilibrium that naturally emerges in aneconomy may not be ef½cient, then achange that moves us from one equilib-rium to a new equilibrium may not bewelfare enhancing.

Another strand of thought in econom-ics owes its origins to a misunderstand-ing of evolutionary biology. Darwin’snotion of natural selection was not tele-ological, but some of those who extend-





ed Darwinian ideas to the social contextargued as if it were. If only the ½ttestsurvived, then society, reasoned such so-cial Darwinists, must also be increasing-ly ½t. This misunderstanding of Darwinbecame central to the Spencerian doc-trines of social Darwinism. Darwin him-self was far more subtle. He realized thatone could not de½ne ‘½t’ in isolation ofthe elements of the ecological system;that different species occupy differentniches; that there are, in effect, multipleequilibria. He realized that the speciesthat survive on one of the GalapagosIslands are not necessarily better orworse in any sense than those that sur-vive on other islands.4

Indeed, there is again no theorem thatassures us that evolutionary processesare, in any sense, welfare enhancing.They may, in fact, be highly myopic. Aspecies that might do well in the longrun may not borrow against its futureprosperity, and hence may be edged outin the competition for survival by aspecies that is better suited for the envi-ronment of the moment.5

Precisely this kind of myopia was evi-denced in the competitive struggles ofthe 1990s. Those investment bankswhose analysts provided distorted in-formation to their customers did best.Repeatedly, the investment banks ex-plained that they had no choice but toengage in such tactics if they were tosurvive. While the most egregious cor-porations and accountants–the En-

rons, Arthur Andersens, Tycos, andWorldComs–had their comeuppances,others survived, even prospered. Andmany continue to defend their practicesand tactics, opposing fair disclosure ofinformation and accounting proceduresthat would allow ordinary shareholdersto ascertain both the levels of executivecompensation and the extent of the dilu-tion of share value through stock op-tions.

The connection between technologyand the evolution of society has longbeen recognized. The innovations thatled to the assembly line increased pro-ductivity, but almost surely reducedindividual autonomy. The movementfrom an agrarian, rural economy to anurban, industrial economy caused enor-mous societal change. While this GreatTransformation is often viewed as prog-ress, it did not leave everyone betteroff;6 so too with the transformationsthat the New Economy and globaliza-tion are bringing about in the societiesof the advanced industrial countries and,even more so, of the developing world.While some of these changes open upthe possibility of greater individualautonomy, others simultaneously pre-sage a weakening of the sense of com-munity. Even the community of theworkplace may be weakened.

Still, I do not believe in either econom-ic or technological determinism. Theadverse consequences of some of thechanges that I have noted are not in-evitable. We have followed one evolu-tionary path; there are others. Much ofthe political and social struggle going ontoday is an attempt to change that path.Those in positions of political power in

4 For an elaboration of these ideas, see KarlaHoff and Joseph E. Stiglitz, “Modern EconomicTheory and Development,” in Frontiers of De-velopment Economics: The Future in Perspective,ed. Gerald Meier and Joseph E. Stiglitz(Oxford: Oxford University Press, 2000),389–459.

5 These ideas are discussed briefly in Joseph E.Stiglitz, Whither Socialism? (Cambridge, Mass.:mit Press, 1994).

6 See Karl Polanyi, The Great Transformation:The Political and Economic Origins of Our Time(Boston: Beacon Press, 2001), with a forewordby Joseph E. Stiglitz, vii–xvii.

fact play an important role in shapingthe evolution both of society and tech-nology–for instance, by creating withinthe tax system rewards and incentivesfor certain business practices.

At the global level, America’s status as the sole superpower has allowed it tostymie progress to greater democracywithin the international arena. Globali-zation has entailed the closer economicintegration of the countries of the world,and with that closer integration there isa need for more collective action, asglobal public goods and externalitieshave taken on increasing importance.But political globalization has not keptpace with economic globalization. Rath-er than engaging in democratic process-es of decision making, America has re-peatedly attempted to impose its viewson the rest of the world unilaterally.

In this essay, I have challenged the the-sis that improvements in, say, technolo-gy necessarily result in an enhancementof well-being. Increases in income canenrich individual lives. They can enableindividuals access to more knowledge.They can reduce the corrosive anxietiesassociated with insecurities about well-being–one of the problems repeatedlynoted in surveys attempting to ascertainthe dimensions of poverty. In doing allthis, improvements in technology canhelp free individuals from the bonds ofmaterialism.

But unfortunately, all that goes underthe name of progress does not truly rep-resent progress, even in the narrow eco-nomic sense of the term. I have empha-sized that there are innovations, changesin technology, that, while they representincreases in ef½ciency, lower economicwell-being, at least for a signi½cant frac-tion of the population.

In the end, every change ought to beevaluated in terms of its consequences.Neither economic theory nor historical

experience assures us that the changesthat get adopted during the natural evo-lution of society and of the economynecessarily constitute progress. More-over, neither political theory nor his-torical experience can assure us that at-tempts to redirect development will nec-essarily guarantee better outcomes. Arecognition of this is, in my mind, itselfprogress, and lays the foundation for at-tempts to structure economic and politi-cal processes in ways that make it morelikely that the changes we face will infact constitute meaningful progress.



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