March 01, 2003
Globalization and its discontents
By Stacia Brown. In former Clinton economic advisor Joseph Stiglitz’s analysis of "market fundamentalism" within the institutions of globalization, the World Bank gets to play good cop to the International Monetary Fund’s (IMF) bad cop. The IMF has failed to live up to its original mission of ensuring global economic stability, Stiglitz argues, because it has adopted an unofficial, even secretive, corporate agenda aimed at pursuing the aggressive interests of global finance. In comparison, the World Bank has begun initiating progressive reforms in order to better address the grassroots economic needs of developing countries.
Stiglitz’s largely benevolent portrayal of the World Bank detracts from an otherwise perspicacious analysis of globalization, which he defines as “the removal of barriers to free trade and the closer integration of national economies.” His benevolent reading detracts, in part, because it prompts questions of prior loyalties. As a former chief economist and senior vice president of the World Bank (1997-2000), Stiglitz appears reluctant to investigate his former institution with the same critical tools that he willingly applies to the IMF.
Perhaps ironically, Stiglitz himself notes that the reluctance to disclose prior commitments constitutes a fundamental structural problem within the IMF. The Fund’s adroit manipulation of information – particularly its refusal to make public its alliances with financial and banking power-brokers such as Citigroup – has effectively benefited Western financiers at the expense of the developing world. As a result, “vast new markets for Wall Street” have been opened; and the struggling governments of post-colonial nations have often paid much of the price.
Stiglitz’s diagnosis of globalization’s discontents places responsibility not only on what he calls such “asymmetries of information,” but also on the rabid “missionary” mindset of free-market proponents during the Reagan/Thatcher administrations. In promoting a naïve economic ideology that viewed markets as a panacea for all developing nations, Reagan-era economic figures such as William Clausen and Ann Krueger began pursuing a decidedly "Western" agenda. Their efforts proved all too successful. Contemporary globalization policies, Stiglitz says, bear the legacy of the Reagan years.
Such a legacy includes, for example, the World Trade Organization’s (WTO) pressuring of developing nations to import Western goods while simultaneously preventing the same nations from exporting products to the United States or Europe. It includes the IMF’s imposition of arbitrary conditions on those nations whom it and the World Bank support, even when these conditions have been shown to weaken, if not collapse, fledgling economic infrastructures. And it includes glaringly inequitable representation: voting arrangements at the IMF, for instance, ensure that the wealthiest nations continually enjoy control of the decision-making process. And when (select) developing nations are permitted to vote, their representatives are chosen not from the working or laboring classes, but from the elite ranks of trade and finance ministers.
Stiglitz maintains, however, that globalization per se is not the problem facing developing countries. Anti-globalization activists overlook the numerous benefits proffered by today’s “global community,” he says, including improved health care, better education, and newly internationalized movements for social justice. The problem, he suggests, is that globalization has failed to live up to its promises: its guiding institutions have abandoned or minimized those commitments to poverty reduction and global economic stability upon which they were first founded.
Although Stiglitz’s attention to the history of the IMF and World Bank could have been expanded – one could argue that globalization cannot be fully understood apart from the legacy of Western imperialism in the nineteenth century – his call for renewed historical attentiveness remains an important one. It has relevance not simply for those wielding power in the international economic system, but also for grassroots activists and critics of global policy. The protest movement against what many are now calling "corporate globalization" has succeeded in raising public awareness about certain injustices in the international economy, but its tendency toward historical short-sidedness has left its message somewhat diffuse, even amorphous.
To an outsider, riots and protests such as those held in Seattle or Genoa may well appear confusing. Are anti-globalization activists concerned about sweatshops or endangered sea turtles? Is the movement trying to reform women’s health care in Africa or to remove McDonald’s from local economies? An informed understanding of why and when the IMF and World Bank were first created, of what changes in mission have occurred in the intervening years, and of the increasingly wide-ranging and interconnected implications of these changes might provide both activists and concerned policy makers with a more coherent platform upon which to call for reform. Stiglitz’s book comes closer than most to providing the information needed to shape such a reforming platform. But it falls short of full disclosure, historical or otherwise.
Globalization and Its Discontents. By Joseph E. Stiglitz. Norton & Co, 192pp. $24.95.
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