Book Reviews
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Book reviews Globalization and its Discontents Joseph Stiglitz, Allen Lane, London, 2002, xvi, 282pp. ISBN: 0-713-99664-1. Joseph Stiglitz and the World Bank: The Rebel Within Ha-Joon Chang, ed. Anthem Press, London, 2001, 320 pp. ISBN: 1-89-885-553-6. Kicking away the Ladder: Development Strategy in Historical Perspective Ha-Joon Chang Anthem Press, London, 2002. 187pp. ISBN 1-84-331027-9 Asian Business & Management (2003) 2, 167–170. doi:10.1057/ palgrave.abm.9200032
Joseph Stiglitz is a political economist — in two senses. On the one hand, he is an economist deeply involved in political debates, even dogfights, over economic policy — during the 1990s, as Chairman of Clinton’s Council of Economic Advisors and as Chief Economist (eventually asked to leave) at the World Bank. But he is also an exponent of that brand of political economy that takes full account of the elements of political power and political values, of confidence and legitimacy, which modify and ‘distort’ market forces and enter crucially into the causal chains that link one economic phenomenon with another, one economic policy with its outcomes. Globalization and its Discontents is less about globalization in general, more a sustained attack on the IMF, on the US Treasury as the biggest single influence on the IMF’s policies, and on the Washington consensus they propagate. Their doctrines of fiscal austerity, privatization and liberalization (especially of capital markets), forced upon developing countries both in crisis and out of it, have hindered growth and the reduction of poverty, and exacerbated discontents — not just the intellectual, emotional and ideological discontents of middle-class protestors against globalization, but the real sufferings of poor people in countries like Indonesia or Russia which have seen catastrophic economic decline in the last decade. The offence is all the greater since ‘globalization — the removal of barriers to free trade and the closer integration of national economies — can be a force for good and ... has the potential to enrich everyone in the world, particularly the poor’ (p. ix). Stiglitz begins by recalling the origins of the IMF in the memories of the Great Depression and the Bretton Woods planning to prevent its recurrence. Keynes saw the role of the IMF to prevent the knock-on beggar-my-neighbour effects that had sent the world’s economies spiralling downwards in the 1930s.
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Individual countries would use fiscal and monetary policies to keep up demand in downturns and so maintain full employment. For countries that could not manage to do that out of their own resources, there was a common interest (because one country’s imports are another country’s exports) in helping them out by providing liquidity in the form of loans. So much for the original mission. But it has undergone complete reversal. Today ‘the IMF typically provides funds only if countries engage in policies like cutting deficits, raising taxes or raising interest rates that lead to a contraction of the economy’ (p. 12).
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