Globalization and Its Discontents (Norton Paperback) [Paperback]

Joseph E. Stiglitz (Author)

Book Description

Publication Date: April 17, 2003 | Series: Norton Paperback

This powerful, unsettling book gives us a rare glimpse behind the closed doors of global financial institutions by the winner of the 2001 Nobel Prize in Economics.

When it was first published, this national bestseller quickly became a touchstone in the globalization debate. Renowned economist and Nobel Prize winner Joseph E. Stiglitz had a ringside seat for most of the major economic events of the last decade, including stints as chairman of the Council of Economic Advisers and chief economist at the World Bank. Particularly concerned with the plight of the developing nations, he became increasingly disillusioned as he saw the International Monetary Fund and other major institutions put the interests of Wall Street and the financial community ahead of the poorer nations. Those seeking to understand why globalization has engendered the hostility of protesters in Seattle and Genoa will find the reasons here. While this book includes no simple formula on how to make globalization work, Stiglitz provides a reform agenda that will provoke debate for years to come. Rarely do we get such an insider's analysis of the major institutions of globalization as in this penetrating book. With a new foreword for this paperback edition. Those seeking to understand why globalization has engendered the hostility of protesters in Seattle and Genoa will find the reasons here. While this book includes no simple formula on how to make globalization work, Stiglitz provides a reform agenda that will provoke debate for years to come. Rarely do we get such an insider's analysis of the major institutions of globalization as in this penetrating book. With a new foreword for this paperback edition.

Editorial Reviews

Amazon.com Review

Due to massive media coverage, many people are familiar with the controversy and organized resistance that globalization has generated around the world, yet explaining what globalization actually means in practice is a complicated task. For those wanting to learn more, this book is an excellent place to start. An experienced economist, Joseph Stiglitz had a brilliant career in academia before serving for four years on President Clinton's Council of Economic Advisors and then three years as chief economist and senior vice president of the World Bank. His book clearly explains the functions and powers of the main institutions that govern globalization--the International Monetary Fund, the World Bank, and the World Trade Organization--along with the ramifications, both good and bad, of their policies. He strongly believes that globalization can be a positive force around the world, particularly for the poor, but only if the IMF, World Bank, and WTO dramatically alter the way they operate, beginning with increased transparency and a greater willingness to examine their own actions closely. Of his time at the World Bank, he writes, "Decisions were made on the basis of what seemed a curious blend of ideology and bad economics, dogma that sometimes seemed to be thinly veiling special interests.... Open, frank discussion was discouraged--there was no room for it." The book is not entirely critical, however: "Those who vilify globalization too often overlook its benefits," Stiglitz writes, explaining how globalization, along with foreign aid, has improved the living standards of millions around the world. With this clear and balanced book, Stiglitz has contributed significantly to the debate on this important topic. --Shawn Carkonen --This text refers to the Hardcover edition.

From Publishers Weekly

Stiglitz, a Nobel Prize winner and Columbia University economics professor, sees globalization's unrealized potential to eradicate poverty and promote economic growth. In recent years, the International Monetary Fund, the World Bank and the World Trade Organization have promoted world financial stability, prosperity and free trade, yet Stiglitz wonders why so many revile these organizations' programs to the point of rioting in the streets. Casting a dispassionately analytical eye at East Asia's and Russia's financial turmoil, he argues that the IMF imposed austere policies that only exacerbated each area's problems. When he finds a similar policy pattern for other countries in crisis, Stiglitz asks how a public institution can ignore growing evidence of a flawed policy and not take action or be held accountable. In answering his own question, Stiglitz blames the "market fundamentalism" that endorses the view that a "free" market solves all problems flawlessly. As Stiglitz authoritatively indicates, one-size-fits-all economic policies can damage rather than help countries with unique financial, governmental and social institutions. He calls for public institutions to reform and become more transparent and responsive to their constituents. Stiglitz shares inside information from cabinet meetings when he served on Clinton's Council of Economic Advisers and from his years as chief economist at the World Bank, divulging debates in Washington's conference rooms, naming names and raising his eyebrows at those who refuse to question certain IMF policies' repeated shortcomings. This smart, provocative study contributes significantly to the ongoing globalization debate and provides a model of analytical rigor concerning the process of assisting countries facing the challenges of economic development and transformation.
Copyright 2002 Cahners Business Information, Inc. --This text refers to the Hardcover edition.

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Product Details

• Paperback: 304 pages
• Publisher: W. W. Norton & Company; 1 edition (April 17, 2003)
• Language: English
• ISBN-10: 0393324397
• ISBN-13: 978-0393324396
• Product Dimensions: 8.2 x 5.5 x 0.8 inches
• Shipping Weight: 11.2 ounces (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars  See all reviews (124 customer reviews)
• Amazon Best Sellers Rank: #32,890 in Books (See Top 100 in Books)
  • #17 in Books > Business & Investing > Economics > Development & Growth
  • #28 in Books > Professional & Technical > Accounting & Finance > International
  • #46 in Books > Business & Investing > International > Economics

More About the Author

Joseph E. Stiglitz is a professor of economics at Columbia University and the recipient of a John Bates Clark Medal and a Nobel Prize. He is also the former senior vice president and chief economist of the World Bank. His books include Globalization and Its Discontents, The Three Trillion Dollar War, and Making Globalization Work. He lives in New York City.

Most Helpful Customer Reviews

108 of 115 people found the following review helpful

5.0 out of 5 stars Highly readable critique of the Washington consensus October 8, 2002

By T. Adshead

Format:Hardcover

I have worked for both development banks and for Wall Street, and have been heavily involved in Russia for the last ten years, and a more than interested observer in the financial crises of the emerging markets since 1991. I also have a decree in economics. I haven't read much economics since I left university, and the first think I want to point out is that this book is highly readable if you have a little economics knowledge, and has rekindled my interest in the subject. I read it on the beach, and at no point does it drag.

I think that there are two main points that Stiglitz makes. The first is that standard IMF policy has tended to approach countries in financial crises with the same rather crude economics as that used on Wall Street, which leads them to think like bank managers rather than economists. If you force a country with a fiscal deficit to reduce government spending, then this will reduce aggregate demand, which will reduce government income, and make the deficit worse, inflicting more pain on the population. The reason that the IMF does this, is that it is meant to restore confidence in the markets, but once a crisis starts, foreign investors tend to bail out anyway, so all it buys you is breathing space. You should accept that the foreign investors are gone, and focus on growth.

The other thing that I got from the book is the hypocrisy of the US administration, which forced policies on emerging markets, which it would not itself accept. In fact, the IMF more or less took instructions from the US Treasury during the 1990s, and certainly my sense at the time was that the actual IMF staffers were very frustrated at the policies that the US government forced them to follow.... The point though, is that while the US government was battling the balanced budget amendment at home, on the reasonable grounds that it limited their freedom to manage demand, they were essentially forcing a balanced budget amendment on the emerging markets via IMF conditionalities. I remember attending a Paris Club meeting, where the Fund said that they were aware that budget deficits could be beneficial - this was never reflected in the lending policies that the Treasury forced on them. Other examples are forcing central banks to focus only on inflation, and forcing emerging markets to open their markets, while protecting US farmers from imports.

The above is an oversimplification of the whole book, and others may get a lot more on other subjects, such as the political process of crisis management, and the specifics of the East Asian economies, which are less of a priority for me. When you are a specialist in a subject, you always find that non-specialist books tend to be wrong about your own subject. I certainly found plenty to disagree with in the sections on Russia, which is my special subject. However, the arguments were cogent (he is a Nobel prize winner, after all) and I found myself looking at my own subject in a new way, and it was interesting to read a broad brush view, which helped me to ignore the trees, and look at the wood.

I'm reading Skidelsky's biography of Keynes, and to some extent, Stiglitz's book reads like WWJMKD (What would John Maynard Keynes do?). What this means is that Stiglitz is a virtuoso economist, and this is a set of well-known events, reinterpreted by someone who is really good at it.

One criticism of the book is that I would have liked to have seen more raw data to support Stiglitz's arguments - he tends to just refer to studies supporting his argument, without showing as much data as I would have liked, but there is a decent bibliography. Another criticism is the veiled suggestion that Rubin (US Treasury secretary), Fischer (deputy head of IMF) and Summers (deputy Treasury secretary) were merely serving their masters in Wall Street, and were subsequently rewarded. This is a little ignoble, as these people were following their convictions, however wrong, and the political climate at the time supported them. But these criticisms should not detract from a really excellent book of popular economics. Read more ›

158 of 178 people found the following review helpful

5.0 out of 5 stars An immensely informative book! Highly recommended! May 24, 2002

By Eric Brendan Chang

Format:Hardcover

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!!! Read more ›

73 of 82 people found the following review helpful

3.0 out of 5 stars Sloppiness and equivocation mar an important work January 17, 2004

By David Egan

Format:Paperback

The thesis of this book is important and compelling, so it's worth summarizing before I explain why I can only give it a three-star rating.

The International Monetary Fund (IMF) was the post-war brainchild of John Maynard Keynes, who thought future economic downturns could be reduced by establishing a source of funds to stimulate the economies of countries without the resources to provide stimulus packages from their own reserves. As an international institution, the Fund would provide impartial aid and offset the protectionist beggar-thy-neighbor policies that had made the Great Depression a global phenomenon.

In the 1980's, however, the Fund's mission was derailed by the new brand of market fundamentalism that marked the Reagan/Thatcher years: the market always knows best, and the best thing a government can do is to stay out of it as much as possible. Subsequently, the Fund's loans have come with a number of restrictive conditions, forcing recipient governments to balance their budgets and keep inflation down, quite the opposite of what Keynes had initially intended.

The evidence through the 1990's, particularly with respect to the Asian financial crisis of 1997, and the transition to capitalism of the former Soviet bloc countries, is that the IMF's market fundamentalism has been a terrible mistake. Stiglitz argues convincingly that the IMF has not only failed to prevent the disasters in Asia and Eastern Europe, but that its policies have been a leading cause of the disasters in the first place, and its subsequent actions only made matters worse. Sending huge aid packages to Russia to hold off devaluation of the ruble only meant that the super-rich oligarchs had a little more time to pocket their cash, ship it out of the country and transform it safely into hard currency....

The IMF looks only at the limited set of numbers, like inflation and deficit, that affect the lives of Wall Street financiers, and pays no attention to figures like unemployment that matter to the poorest citizens in the countries the IMF is supposed to be helping. As a result, the rich are getting richer, and the poor are getting angrier. Globalization has unprecedented potential to raise the standard of living of people across the globe, but as it is presently being handled it is ravaging the developing world.

These are all points well worth making, and I'm glad I read the book to come to a clearer understanding of them. Despite its good intent, however, it's hamstrung by poor writing and presentation, and worse, by a vindictive righteousness that leads Stiglitz occasionally to ignore or distort the truth if it will help him to make his argument sound more convincing.

The problems begin with the title. The book isn't really about globalization per se; it focuses on the aspect of globalization with which Stiglitz is intimately familiar: international financial institutions like the World Bank and the IMF. "Globalization and its Discontents" is a catchy title, and I suppose it must have been hard to resist. But to be clear: this book is essentially an invective against the IMF, where Stiglitz stops short of accusing the Fund of outright malice, preferring to emphasize its dogmatism, stupidity, narrowness, and occasional venality.

The misleading title is symptomatic of the uncertain thrust of the book. The style is plodding--a couple of clichéd nautical metaphors hardly lift Stiglitz's style out of the mud--not to mention repetitive. The structure is unclear, so that Stiglitz returns to the same points in several chapters while never fully fleshing out other important points, all the while leaving the reader uncertain of where the argument is going. Besides the soporific style and sloppy structure, there are more than a few typos and inconsistencies in convention (is it the "Washington Consensus" or the "Washington consensus"?)

These shortcomings make for a tiresome read and weaken Stiglitz's argument at many points. What's worse is that Stiglitz seems willing to take a few steps beyond the truth if it helps him make his point. In one controversial passage, he all but claims that Stan Fischer, former deputy managing director of the IMF, was in the pocket of Citigroup and obediently took orders from Citigroup while planning the Fund's policies. He has since denied that he intended to smear Fischer, and I believe him. But sloppy writing is evidence of sloppy thinking: unintentionally accusing a respected economist of criminal venality is no small error.

In a similar vein, Stiglitz falls into equivocation where it serves his purpose. At the beginning of chapter 6, he first points to the number of former communist countries, including Russia, currently governed by former communists as evidence of Eastern Europe's disillusionment with market fundamentalism. In the following paragraphs, he attacks Yeltsin and Putin for the crony capitalism and corruption that's come from allying themselves with Wall Street's interests. Either the Russian leaders represent a rejection of the IMF's market fundamentalism or they don't; you can't have it both ways, certainly not in consecutive paragraphs. Nor can you insist that successful development relies on policies suited to intimate knowledge of the particulars of each individual country and then insist, as Stiglitz does early in the book, that the prime minister of Ethiopia is a responsible leader because Stiglitz chatted with him and he seemed like a nice guy. Stiglitz seems determined to make his point, and he won't let facts or logic get in his way. I want to agree with him, but he doesn't inspire my trust.

It's a shame that Stiglitz makes this book hard to like because I think it's an important one. The same argument could have been made in a shorter, clearer book that didn't stretch the truth in order to sound convincing. As it stands, the book provides plenty of easy targets for those who aren't inclined to agree with Stiglitz, and so it isn't likely to persuade many of the unconverted that the IMF needs to change its approach. Read more ›