Globalization and its discontents

Globalization and Its Discontents

Introduction and Short Summary

Globalization and Its Discontents was a book written in 2002 by Joseph Stiglitz who has a number of credits to his name . Not only is he one of his generation 's finest academic economists (became a Nobel Laureate in 2001 , he also became one of its premier practicing public economists through his tenure as chairman of the President 's Council of Economic Advisers under Clinton , and latterly as chief economist at the World Bank . It was the frustrations of his time at the Bank

that led him to write this book , distilling his experiences in public policy into a general critique of the "Washington Consensus " that shapes the international economic agenda . This book can be thought of as two books in one : a general essay on what has prevented the developing world from catching up with the economic leaders , and an expose of the institutional structures of the international politico-economic system and the failure of globalization

Stiglitz is not against the broader goals of globalization but deplores its less appealing aspects . He acknowledges the significant advantages globalization has led to in integrating the world economy and , above all , in reducing the isolation of developing countries from the world economy . Although trade liberalization has brought tangible benefits , in Stiglitz 's view , it has also caused economic havoc , due largely to the absence of safety net for the poor . He abhors the hypocritical attitude of rich countries when they force the developing countries to liberalize trade , but keep intact their own formidable barriers and subsidies particularly on agricultural trade . His criticism is particularly incisive when it comes to the quality of governance in the major institutional institutions that have shaped globalization agenda

He criticizes other specific policies such as fiscal austerity , high interest rates and insistence on the privatization of state assets . In response , Stiglitz calls for greater transparency and better governance of international financial institutions , as well as proper economic "sequencing " Despite his populist tendencies , Stiglitz presents an insightful and unsettling account of the inner workings of global financial institutions , ultimately reaffirming that there is no simple formula on how to make globalization work

Critical Analysis

Of all the institutions involved in globalization , Stiglitz focuses excessively on the International Monetary Fund (IMF ) for the major part of his criticism , since this institution has single-handedly played a monumental part in developing countries and in emergent economies , such as Russia . Stiglitz believes that the misguided policies of IMF have caused instability and disastrous consequences wherever it has intervened . For instance , its policies in East Asia worsened matters because it pursued unsuitable demand management policies in the wake of financial crisis there . These policies failed not because of lack of commitment but rather because their very foundation was one of flawed economic analysis

Stiglitz provides numerous examples of these faulty policies from Africa , Latin America , Russia and most recently , East Asia . Since the original purpose of the IMF was to provide liquidity for short-term stabilization , the...