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Book
Review |
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Stiglitz, Joseph E. Globalization and Its Discontents (New York: W. W. Norton, 2003). 288 pp, $15.95 (paper).
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Joseph
E. Stiglitz, a professor at Columbia University, was the 2001 Nobel laureate
in Economics. He served as Chairman of the Council of Economic Advisors during
the Clinton administration, and then served as vice president and chief economist
at the World Bank from 1997 to 2000. In this book, he has written a sharp
critique of the contemporary trend toward globalization, based on his extensive
experience in the study of economics and in international finance and banking.
Stiglitz points out the imbalances created by the policies of 'first world'
nations (and their bankers) and the pressures those imbalances place on developing
countries. Using the economic crises in Asia and Russia during the 1990's
as his primary case studies, Stiglitz carefully describes the intentional
actions of bankers and policy-makers that led to the collapse of those nations'
economies. He then presents a well-reasoned list of reforms that he proposes
for the international financial system and for the World Bank in particular. Globalization and Its Discontents is
an important and timely study of the global economy in the 21st
century that should be required reading for students and scholars of world
history alike. |
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In the
first three chapters of Globalization and Its Discontents, Stiglitz describes the developments of international
finance institutions such as the World Bank, the International Monetary Fund,
and the World Trade Organization. Stiglitz stresses that he is not opposed
to globalization per se. Indeed,
he notes that "Globalization itself is neither good nor bad. It has the power to do enormous good." (20) However, he argues that its track record is one
of limited success. Stiglitz is critical of the power given to finance ministers
and central bank presidents who, loyal to their own banking sectors, place
policy goals ahead of the needs of people in developing economies. He argues
that "a world government, accountable to the people of every country" is needed
"to oversee the globalization process" and to limit the power of financial
institutions over the global economy. (21-22) Stiglitz is also highly critical
of the secrecy and lack of openness at places such as the World Bank and IMF.
As he notes, "Today, in spite of the repeated discussions of transparency,
the IMF still does not formally recognize the citizen's basic 'right to know':
there is no Freedom of Information Act to which an American, or a citizen
of any other country, can appeal." (52) |
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Chapters
4, 5, and 6 present detailed case studies of the economic crises in Asia and
Russia that roiled global markets in the 1990's. Stiglitz describes this period
as "the greatest economic crisis since the Great Depression—one that would
spread from Asia to Russia and Latin America and threaten the entire world."
(89) He argues that, "in retrospect, it became clear that the IMF policies
not only exacerbated the downturns but were partially responsible for the
onset." (89) In both situations, Stiglitz places the blame on policy-makers'
desire to force a political policy into place through economic means. In Asia,
this meant enforcing a strict laissez-faire attitude towards the needy. In Stiglitz's view, "the
IMF often talked as if what the economy needed was a good purgative. Take
the pain; the deeper the pain, the stronger the subsequent growth." (122)
In the case of Russia, he argues that IMF policy was controlled by a desire
to bolster the administration of Boris Yeltsin. As Yeltsin's problems, and
those of the Russian economy, mounted, he describes reactions within the IMF
and the U.S. Treasury as "not unlike those of officials earlier inside the
U.S. government as the failures of the Vietnam War became clearer: to ignore
the facts, to deny the reality, to suppress the discussion, to throw more
and more good money after bad." (168) |
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The final three chapters of the book contain
Stiglitz's proposals for making reforms to the system to prevent, or at
least minimize, future economic crises. Chief among these reforms are the
need for better governance of international financial institutions and greater
openness and transparency in their decision-making. Stiglitz also calls
for improved regulation of banking and finance sectors and increased attention
to safety nets for the poor. He also advocates additional economic assistance
to developing nations and the forgiveness of the huge debt burdens that
restrain those nations' economies. He argues that a more balanced trade
policy is also needed to help reduce economic inequality among world nations. |
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Globalization
and Its Discontents is a powerful book
that sets out a clear challenge to the global financial establishment. As
Stiglitz describes in the afterword to the paperback edition, it has been
received with harsh criticism from many within the IMF and multinational banking
hierarchy. Still, even if one is not inclined to agree with his interpretations
or his economic views, it is difficult to challenge his description of the
events in question. His careful narrative, clear explanations, and extensive
citations make for a powerful argument. Furthermore, his essential thesis,
ie. that reforms are needed within the IMF and the financial establishment,
seems to be one that most students of the global economy would be willing
to accept. I would not hesitate to include Globalization and Its
Discontents as a reading selection for any number of courses. While
some details are overly technical at times, the overall message of the book
is clear and easy to understand even for those who are intimidated by economic
jargon and theories. It is appropriate not only for a course that focuses
on economic themes, but also for a general World History survey. And while
this book could certainly stand on its own on a reading list, I would consider
placing it alongside two other recent books on the same topic. For a broader
and more traditional history of globalization, I would begin with the recent
English version of Jürgen Osterhammel and Niels P. Petersson, Globalization:
A Short History (2005). For a contrasting
view to Stiglitz's, I would include Martin Wolf, Why Globalization
Works (2004). |
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Nobel
laureate Joseph E. Stiglitz has presented many thought-provoking issues in Globalization and Its Discontents.
It should influence our thinking about the global economy and the relationship
between nations in the modern world. His book deserves to be read and his
ideas are sure to be the basis for debates on economic policy and theory for
years to come. |
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William E. Doody
Indiana Area School District |