Globalization and Its Discontents

Rating:
Summary: Not convinced
Review: This book is not about globalization at all, but about the problems Stiglitz has with the IMF. Stiglitz do raises interesting questions about IMF policies and some of his recommendations on what should have been done in certain cases are worthy of notice. However, some other times his own hatred for the IMF fogs his supposed impartiality. For example, Stiglitz says the IMF had it wrong in Argentina, the Fund's star posterchild. I myself have been deeply involved in Argentina, and I agree with the comment made by a previous reviewer. The reason Argentina got into the mess it is now is not the Fund's fault, but the fault of Argentinian political class. They just didn't want to adjust fiscal expenses (specially in the Federal Provinces), which was something the IMF had been insisting 3 years before the country's colapse. Stiglitz really disappointed me when he mentioned that foreign banks were the main cause of Argentina's colapse, as these international institutions drove local institutions out of the market. Nonsense! It was thanks the internationalized banking system that Argentina survived the Tequila Crisis of 1995 and the reason it survived all the way to 2002. Had it not been for the strenght of its international banks, Argentina would have gone south much before 2002. Had the political class made a national consensus to fix the country's problems (plus IMF monies) it would had survived, because the strenght of the banking system bought the time Argentina desperately needed to build a concensus that never materialized.

Stiglitz argues that it is bad policy to lower protectionism too fast - he believes in gradualism. I thought he knew developing countries better. Protectionism, at least in Latin America, favours a rich minority at the expense of the poor, who happen to be the mayority - and the people Stiglitz is suppose to protect. In Latin America, the poor spend up to 80% of their income on food, which happens to be highly protected. Therefore, protectionism acts as a regresive tax that hurts the poor and keeps them permanently in starvation. The faster these evil policies are eliminated, the more lives we can save. Furthermore, by imposing gradualism, interest groups have the time to reorganize and fight back, or they can always wait to bribe the next government (if the current officials are honest). By reducing tariffs once and for all, a new interest group will emerge: millions of people who can now access less expensive food. In other words, give the poor consumers the freedom to choose.

These were the issues, I thought, the book should have addressed, and not whether or not it was correct to prescribe higher interest rates for Korea in 1997.

Still, I recommend the book, b/c Stiglitz is too good an economist to ignore, and some of his criticism to the IMF are valid.

Rating:
Summary: A disappointing and often inaccurate critique
Review: Joseph Stiglitz is an outstanding technical economist whose seminal work on, among other subjects, the economics of information deservedly won him a Nobel Prize. Moreover his earlier work on political economy - he wrote a good book on socialism a decade ago - exhibited balance and insight. But this book is a disappointment: it is superficial, polemical and often inaccurate. On occasion it stoops to some quite unworthy aspersions upon those who differ from Stiglitz's views.

Stiglitz's thesis is that something has gone 'horribly wrong' with globalisation. He argues that the process of international economic development has been undermined by supranational institutions - specifically the IMF, which operates apparently at the behest of the US Treasury - that are in thrall to what he variously terms 'market fundamentalism' and the 'Washington Consensus'. This consensus is alleged to comprise three axioms: control of government spending; privatisation of state industries; and the dismantling of trade barriers. In Stiglitz's view, these measures might have been appropriate for Latin America in the 1980s, but have now degenerated into a dogma that is applied to all countries by the IMF, with destructive consequences. More than that, Stiglitz insinuates that the IMF's proposed remedies in the developing world have been driven by narrow corporate self-interest, noting that the former deputy head of the Fund, Stanley Fischer, has lately taken up an appointment at Citibank.

This account is an ill-tempered caricature of a complex subject, and Stiglitz's wild accusation against Fischer is demeaning to himself. Stiglitz has little background in development economics, and this deficiency shows up in his account of, for example, reform of the banking system in Kenya. Moreover, the axioms of the supposed Washington Consensus identified by Stiglitz have very little to do with 'market fundamentalism', though they are misinterpreted that way by the affluent western campaigners against globalisation who would deny to the Third World the means of development. The case for free trade, for example, is not about markets at all but about specialisation, in that the mechanism of comparative advantage enables countries to concentrate production on what they do best and thereby grow richer owing to gains in productivity. (To take the case of a leading critic of Stiglitz's work at the World Bank: it is absurd to suppose that the world's pre-eminent advocate of free trade, Jagdish Bhagwati of Columbia University, is any sort of free-market fundamentalist. He explicitly rejects a parallel between the case for free trade and that for capital market liberalisation, and is a strong supporter of social programmes, which he nonetheless believes should be kept separate from trade agreements.)

The most serious deficiency of Stiglitz's account is its often startlingly ill-informed account of IMF country programmes: it is just not true to present, say, Argentina as a victim of IMF stablisation policy. On the contrary, the IMF was at fault for *not* intervening to prevent Argentina from pursuing incompatible policy objectives, most notable among them an extreme form of fixed exchange-rate regime known as a currency board (comparable to a gold standard, but where the unit of account was the US dollar) that plunged the country into recession. The IMF was, from the outset, deeply sceptical of such a policy, and should have done more, in the interests of Argentine living standards, to lobby against it.

This book has some interesting incidental material about the author's time at the World Bank, but the theoretical and policy aspects of Stiglitz's writing are weak. There are many better books about globalisation; a forthcoming book by Philippe Legrain, former adviser to the director-general of the World Trade Organisation, promises much. There is at root only one insight in Stiglitz's book that is worthy of note, and that is the necessity of grounding economic liberalisation in functioning political institutions. But the idea that this constitutes in some way a criticism of the neo-liberal approach (and, as a believer in Third World development and the abolition of poverty, I am proud to associate myself with neo-liberalism) is bizarre; no Hayekian, stressing the rule of law and acknowledged rights of property, would say anything different.

Rating:
Summary: Not very serious. Be skeptical.
Review: Unfoutunately there are times in the history of thought (and of man), when intellectuals sacrifice their seriousness and scientific objectivity to pursue their own ambitous and selfish agenda in a scholarly disguise. Mr. Stiglitz gives in this book a bad name to the economics profession by being sloppy, very informal and extremley personal with his attacks (an agenda he has been pursuing since his bad work at the World Bank).
The book has several strong statements (some even include atacking the character of extremely well regarded individuals) that are no supported at all by fact, record or footnote.
Regarding the issues --which is the only thing we should care about-- he speaks lightly, uninformed and it is just bad policymaking. (It need be said that of course this reviewer admires Mr. Stiglitz academic record).
In the end, let's just hope that there remains seriousness in academia -particularly in economics- and that "big names" do not hide behind their credentials to throw at people their anger at society and at better characters (even if they are not as "smart" as Stiglitz beleives he is).

Rating:
Summary: Good book.
Review: Some of the author's statements may seem quite questionable but I do not think that he wrote this book as a scientific treaty but as an invitation to debate, and in that sense it fulfills its aim. If his attacks on the IMF seem sometimes a little too cruel, that institution is strong enough to defend itself and I would certainly like to see it doing so. I agree with the author's contention that more transparency and open discussion would be good.

Rating:
Summary: Have an Agenda, Do We?
Review: Joseph Stiglitz is an intelligent man with amazing credentials to write about globalization, having won the Nobel Prize in economics in 2001. However, his characterization of "market fundamentalism" is about as market-oriented as Stalinism was Communist.

While globalization is often fingered as the culprit in the collapse of the East Asian economies in 1997, this can be traced to a variety of factors. Surprising as this may seem, one of these was a lack of liberalization...

As for Stiglitz' contention about the "market fundamentalist" tendencies of the IMF: The IMF is not favored by true "market fundamentalists."...

I do agree with Stiglitz' contention that the IMF policy of high interest rates did not make sense, as it unnecessarily killed salvageable business. That much is obvious. However, Mr. Stiglitz' assertion that this has anything to do with "market discipline" or "market efficiency" has it all wrong...

Stiglitz also mentions that gradualism is preferable to "shock therapy." While it is true that shock therapy (hence the name) is a much more painful process in the short-term, those countries that have undergone such a process have continued to outperform those that dragged their feet... Stiglitz mentions nothing of this.

It is obvious that the IMF is an unnecessary institution, creating perverse incentives and ruining economies. So why not take the truly "market fundamentalist" step, and abolish it?

Rating:
Summary: An immensely informative book! Highly recommended!
Review: I could not put this book down after I got my hands on it! Mr. Stiglitz is a Nobel Laureate in Economic Science who had the chance to serve both in the Clinton Administration and also in the World Bank. He therefore had much insights and experiences to impart to the readers. This book did not disappoint. It is packed with fascinating anecdotes and his interpretations of the events relating to the global economy, global finance and global institutions during his tenure as an economic adviser to the White House and the Chief Economist at the World Bank. He articulates the original roles of the public institutions such as the IMF, the World Bank and the WTO and shows how they do not live up to their supposed mandates. He exposes the disastrous policies of the IMF which had led countries after countries, on its crusade to impose the Gospel of Market-Fundamentalism, into desolation and devastation. Martyrs made out of the IMF's ideologically-driven zeal and unaccountable behaviors littered the trail on which the IMF carried out its missionary programs. Dr. Stiglitz also highlighted how the IMF and U.S. Treasury, and the Wall Street embellished their misdeeds with tricly phrases, chopped logics and misinformation; how the U.S. decision-making bodies pushed the developing countries to open up for trade while erecting trade barriers themselves to protect the vested commercial interests in the U.S.'s constituency. The chapters on the East Asian Crisis and the Russian situation are especially fascinating. One inevitably gets drawn into the stories as they unfold in the book. However, this book is far from being a cynical and unconstructive compilation of complaints and indictments. Building a more just, more equitable, and sounder global economic and financial arrangement is in the front and center of the book. Dr. Stiglitz points the way forward with a unique vision and a touching passion. His compassion and his belief in how globalization and economic science can improve the welfare of the poor and the disadvantaged shine through. As a trained economist, I highly recommend this book to all those who are concerned or simply curious about the excesses and the potentials of globalization and its future. This book is full of insights and gems of economic reasoning. For those who have trainings in economics, it is a very good book to show how economic thinking is applied to real world situations. For those who do not know much about economics, read this book slowly will also yield significant dividends in understanding our world and the huge stakes involved in the process of globalization. Five stars!!!

Rating:
Summary: Rakes the IMF over the coals
Review: There are actually at least four books published in the last eight years with the title "Globalization and its Discontents," and for Joseph Stiglitz's book the title is probably a bit misleading. This is NOT a general indictment of globalization. When it comes to international economics, Stiglitz is the consummate insider: he was recently the chief economist for the World Bank, for crying out loud! You won't find him protesting on the streets at the latest WTO meeting.

This book contains something better: a tightly argued, detailed critique of the ideologically-driven free-market policies that the International Monetary Fund (IMF) has been pushing down the throats of developing nation after developing nation. Stiglitz makes the following major points:

* The IMF has a deep faith in the power of free markets to solve all economic woes, and sees the primary historical effect of market intervention as stifling, rather than enabling, the development of truly free markets;

* This position of the IMF is, however, poorly supported by the bulk of economic evidence from the last three or four decades of globalization, and more nuanced models of free-market development (some of which were developed by Stiglitz himself) show that an active government role is typically crucial in the development of healthy indigineous free markets;

* The conditions under which the IMF makes loans to developing countries generally harm, rather than aid, the short- and long-term economic health of these countries for the lower- and middle-class populations;

* IMF-imposed conditions generally ARE good news for foreign investors, whose risk the IMF loans are in effect underwriting;

* The economic ministries and cabinates of developed countries themselves, such as the U.S., generally adopt policies much more moderate such as those of the IMF, casting doubt on whether the IMF is really the source of much economic wisdom at all.

All these points in a dense yet well-written book that covers cases of African debt, Russia after the fall of communism, the East Asian crisis, and more. The book takes some intellectual energy to read but it's well worth it. I learned a great deal about the last ten years of international economic development, and I recommend Stiglitz's book highly.

Rating:
Summary: A must read
Review: I have read over 50 books on topics related to economics, and the socio-political aspects of globalization, free-markets, and their history. This topic has, for years, fueled passionate debate among Keynesians and liaise faire economists to name a few. And today, with globalization affecting everyone of every walk-of-life, this debate is making its way into the local coffee shops and hair salons.
Of the 50+ books mentioned, there is not one that I would direct the general population to. Yet it is ever more crucial for the masses to understand how globalization drives the politicians they vote for, who in turn enact the laws that determine how globalization will affect us all.
Dr. Stiglitz's book requires at least a basic education in economics to follow references to John Smith, Keynesian economics, Marginal Utility, and the interplay of state taxes and interest rates, for example.
For those with a basic knowledge of such things, this book is a must read -- for two important reasons:
1) It was written by Noble Prize winner Joseph Stiglitz, former economic advisor to the Clinton Administration and Chief Economist at the World Bank. You can no longer argue the topic as a learned individual if you don't read this book (agree with it or not).
2) Whether you believe Dr. Stiglitz has a bone to pick with the IMF, it is difficult to ignore his passion for doing what he believes is right. The overriding theme is Dr. Stiglitz's insistence that organizations driving developing countries toward globalization, through market liberalization, do so with transparency -- allowing proper and constructive critique and debate to play a democratic role in ensuring that scarce resources and the impoverished of the world aren't taken advantage of.
And finally, after reading this book, you will learn how the IMF, World Bank, and others work to indoctrinate developing countries into the world economy. In Dr. Stiglitz's view, reforms are prematurely accelerated to ensure that financiers receive their expected return on investment -- often at the expense of a heavily indebted nation.
Whether you believe this or not, it is plausible, and demonstrable, through history, that the interests of the wealthy have great potential for abusing resources and the less fortunate. With the stage set in this manner, coupled with secretive closed-door meetings at the IMF, it is a conceivable scenario that the IMF has, at times, made matters worse in a weakened economic and heavily indebted country. In researching my master's thesis on globalization, I have corroborated stories and case histories that support Dr. Stiglitz.
Well, heck, you should see how the creditors came after little-ole me when i lost my house to a flood in the same year that I was laid off from my job due to recessionary conditions! Financiers are not in the mercy business.

Rating:
Summary: Well written critique of globalization for non-specialists
Review: The subject of Joseph Stiglitz's widely reviewed and bestselling book "Globalization and Its Discontents" is the costs and consequences of free market "fundamentalism".

Winner of the 2001 Nobel Prize in Economics, Stiglitz argues in "Globalization" that the policies of the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO), enrich wealthy nations at the expense of the developing world.

The IMF, World Bank, and WTO were created at the United Nations Monetary and Financial Conference (Bretton Woods) in July 1944 to increase global wealth by liberalizing international trade. Nevertheless, many signatory governments succumbed to pressure from domestic producers and were either slow to liberalize trade or actually increased trade barriers.

As the Soviet Union began to crumble in the 1980s, however, renewed attention was given to international trade liberalization. Neoliberal economists gained considerable influence in the IMF, U.S. Treasury, and other powerful organizations, and turned their policies toward monetarism and supply-side economics and against government participation in the economy. Countries adopting these doctrines have slashed taxes, reduced or eliminated social programs, privatized public services, and, especially in the developing world, experienced great social, political, and economic turmoil.

Stiglitz argues that since the 1980s the IMF, WTO, the U.S. Treasury, and other influential bodies, have pushed a neoliberal agenda with little knowledge or concern for the states affected. He contends that proponents of "globalization" are neoliberals so hidebound by their ideology they ignore the reality of the developing world when prescribing economic policies.

Stiglitz begins his critique of globalization by noting that privatization of public services is the first tenet of neoliberalism. He generally agrees with neoliberals that industries operated by governments are not as efficient as those run by businesses. He points-out, however, that governments - especially those in developing nations - often run industries because the private sector has failed to deliver the essential services industries provide, and argues that privatization in the developing world increases unemployment and results in the transfer of valuable capital assets from countries that need them most.

Trade liberalization is the second tenet of globalization scrutinized by Stiglitz. According to neoliberals, liberalizing international trade increases global wealth by forcing countries to shift capital from less to more productive uses. Stiglitz, however, claims the IMF and other proponents of globalization create economic and social havoc in the developing world by forcing countries to liberalize trade before they have developed the institutional, technological and financial infrastructures necessary to support the emergence of internationally competitive enterprises. Stiglitz also notes the hypocrisy of Western countries - the principal proponents of globalization - pushing trade liberalization for goods they produce but balking at removing import restrictions on products from the developing world.

Stiglitz concludes his broad analysis if globalization by examining the role of foreign investment in the developing world. Neoliberals argue that developing economies benefit from foreign investment because, among other things, it reduces the cost of financial capital, increases the transfer of technology from the "first" to the "third" world, and forces developing nations to make reforms attractive to investors. By contrast, Stiglitz argues that foreign investment can create instability because foreign lenders offer better rates than domestic lenders, fail to lend to small and medium enterprises, and are immune to discipline by the host nation's central bank.

Joseph Stiglitz's "Globalization and Its Discontents" is a good survey of the costs and consequences of globalization. Its greatest strength is that it is an intelligent and well-written critique of globalization from a pro-capitalist perspective. Essentially, Stiglitz contents that globalization has met with a groundswell of protest from around the world because its neoliberal authors forgot that economics is a social science, and that it must therefore concern itself with the welfare of people not just corporations.

By failing adequately to address education, welfare, the environment, and the redistribution of income and opportunity in the "developed" and "developing" worlds, the IMF, the World Bank, the WTO, the U.S. Treasury, and other neoliberal institutions, have neglected the most important wants and needs of the world's people.

Rating:
Summary: the book is about IMF errors
Review: as it has been already said in different reviews, the book deals with the errors of the IMF in developping countries, and in my opinion the critics are well written and based on true facts. so the book title should be rather IMF errors than globalization and its discontents. with this title the book seems to be against globalization and that's not true. perhaps useful in order to increase sales, but stiglitz writes clearly that well managed, globalization is the best thing for poor countries. yes it's possible to write an entire book about the discontents of globalization with good arguments, but it is not the book to make an opinion about globalization.