Stiglitz: Obama himself has made clear in many speeches that he wants to prevent prospecting in the American financial industry. But Obama is under pressure from Wall Street. Even within his own administration, there are a lot of officials who are only for cosmetic corrections.
SPIEGEL: The US is against too much regulation in the financial markets, Germany and Japan would prefer no further economic stimulus packages. Can much come out of the G20 summit?
Stiglitz: The governments will find the words to put a positive spin on the conference. If they can do anything, they can do that. Everyone will say that more regulation is necessary and that balance is needed between national sovereignty and common action in a globalized world. But how much substance will lie behind their words? I'm skeptical.
SPIEGEL: The economic crisis has severely damaged the economic model of finance-driven turbo-capitalism. Will this lead to a renaissance in the state economy?
Stiglitz: I don't think so. The fall of the Berlin Wall really was a strong message that communism does not work as an economic system. The collapse of Lehman Brothers on September 15th again showed that unbridled capitalism doesn't work either.
SPIEGEL: Could authoritarian systems like in China be the future?
Stiglitz: Besides the two extremes of communism and capitalism, there are alternatives, such as Scandinavia or Germany. The Chinese model has succeeded very well for their people, but at the price of democratic rights. The German social model, however, has worked very well. It could also be a model for the US administration.
SPIEGEL: The crisis began in America, spread to other industrialized nations and now threatens the emerging and developing countries. Is the target of the community of states to halve global poverty by 2015 still achievable?
Stiglitz: Because we don't know how long this crisis will last, it will become more difficult to keep to this promise. I'm also pessimistic, for example, now that the USA is discussing whether we can still afford development aid during the crisis. But there are countries like Japan and Germany that have raised their contributions to the IMF and World Bank to help the Third World.
SPIEGEL: Will Africa be the big loser in the crisis?
Stiglitz: I'm fearful of that, because even the high growth of 6 percent in Africa in the last few years hasn't been enough to permanently fight poverty. A lot of the countries on the continent which inherited a low standard of education, and no infrastructure from colonialism, have solely focused on increasing commodity prices. That was a risky strategy. The IMF's structural development policies also contributed to deindustrialization. We haven't managed to create a stable foundation for the African economies.
SPIEGEL: World Bank president Robert Zoellick has said that the industrialized nations should direct 0.7 percent of their stimulus packages to the developing countries.
Stiglitz: That's too little. Take the US example. Each country would receive around $5.5 billion per year from $789 billion. It's a lot more than nothing, but only a drop when compared to what the countries require, namely up to $700 billion in this year alone.
SPIEGEL: The opposition in Germany is already complaining about government stimulus funding for infrastructure in developing countries.
Stiglitz: All the more reason for governments to persuade their people that it is in our own interest that all national economies grow. If banks in Eastern Europe collapse, it weakens Western European banks and then American financial institutions. If we are to learn one thing from the economic crisis, it's this: Globalization can't be stopped. It has to be managed or else the global economy won't work.
SPIEGEL: Mr. Stiglitz, thank you for this interview.
Interview conducted by Michael Sauga.
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