67 of 70 people found the following review helpful
5.0 out of 5 stars Globalization and Democracy
This new book by Joseph Stiglitz discusses many of the issues of his earlier work, "Globalization and Its Discontents." The previously described discontents have become more pressing in the interim. Stiglitz reminds us again that globalization and economic growth are bypassing a large number of people in the developing world; in fact, some of the so-called developing...
Published on November 8, 2006 by Izaak VanGaalen
33 of 44 people found the following review helpful
3.0 out of 5 stars Really doesn't say that much
The biggest problem with Making Globalization Work is that it's very light on actual content. Plenty of issues are dealt with at the level of mere assertions, simplistic models and examples, and there is much that amounts to making insider claims (according to Stiglitz, "the Clinton administration was engaged in a grand battle to enhance access to health care for...
Published on January 26, 2007 by biggles
Most Helpful First | Newest First
67 of 70 people found the following review helpful
5.0 out of 5 stars Globalization and Democracy,
This new book by Joseph Stiglitz discusses many of the issues of his earlier work, "Globalization and Its Discontents." The previously described discontents have become more pressing in the interim. Stiglitz reminds us again that globalization and economic growth are bypassing a large number of people in the developing world; in fact, some of the so-called developing world is not developing at all.
He facetiously points out that a cow in Europe earns more than half of the people on the planet. The $2 a day subsidy of the European cow is equal to the the cut-off line defining poverty, and half of the earth's inhabitants live below this level. This example illustrates the ostensible unfairness of the current system. European, American, and Japanese multinationals, and the trade negotiators who represent them, argue for freer trade yet they refuse to relinquish agricultural subsidies. This is very unfortunate for the developing world since about 80 percent of their economies are agricultural. Nothing would help them more than if the rich countries stopped subsidizing their agriculture and opened their markets to imports. Economically this is a good idea, politically the it is a non-starter. The French will not be importing Brie and the Japanese will not be importing rice.
This seems to be the case with many of Stiglitz's ideas: they sound reasonable and fair, but unfortunately fairness is not a priority for many trade negotiators.
Stiglitz's proposal for a global reserve system is another example of a good idea whose time has not yet come. Today, when countries set aside money for a rainy day, the currency of choice is the US dollar, which for the time being is relatively stable and strong. The only problem is that the US is financing these global reserves at the rate of $2 billion a day - a truly unsustainable trend. Stiglitz's solution, borrowed from John Meynard Keynes, is to create a universal currency. In good times reserves can be held in this currency and in bad times these reserves can be drawn. Sounds eminently reasonable but Uncle Sam is not going to give up the the reins.
What Stiglitz is doing is calling for greater democracy in the global trading system. Currently the global trading system is stacked in favor of the rich nations, especially the US. This is not to say that rich nations don't have their issues - they do. What is important in this book is that the poor countries should be given a better deal. Much has been writtem about bad governance in the developing world, and much of it is true; however, aggravating these problems are unfair trade agreements. Stiglitz is important because he gives a voice to the developing world's vulnerablity. For example, when poor countries are forced to open up their markets to foreign banks, their local banks are put out of business, and, as a consequence, local lending suffers. More democracy in the global trading system would go a long way in alleviating some of these unjustices. The only question is: Are the rich and powerful nations ready for more democracy and a more equitable trading system.
32 of 34 people found the following review helpful
5.0 out of 5 stars Expert advice on managing Globalization,
There is a breed of economists who have what can only be described as a mystical reverence for the market. To them Adam Smith's `invisible hand' is not a merely a literary conceit but an actual force like electromagnetism or gravity. Following the advice of Milton Friedman these economists would privatize literally everything from primary education to road maintenance to social security. The government would act as a modest referee deciding property rights as well as defending borders. This is the mindset under which the IMF and World Bank operate. It's the "Washington Consensus", a one-size-fits-all solution to all economic problems and it's been active for decades using the indefatigable wisdom of the "free market" to solve all the world's ills.
The problem is that the "Washington Consensus" as instituted by the IMF and World Bank has had disastrous results in many countries around the world most notably Russia. As the chief economist of the World Bank from 1997 to 2000, Joseph E. Stiglitz is probably a pretty decent source to go to for on why so many countries AREN'T booming after instituting IMF imposed "structural adjustments". The author offers Argentina as an example of a country which received an A+ rating from the IMF for following the Washington Consensus only to face financial calamity a few short years later.
As the author puts it, one of the main problems is that, "the Washington Consensus prescription is based on a theory of the market economy that assumes perfect information, perfect competition, and perfect risk markets". Mr. Stiglitz writes, "policies have to be designed to be implemented by ordinary mortals". Economists seem to have become so enamored by the blackboard theories behind pure free market economics that they ignore the reality of its results. Even worse, when economies follow the IMF's prescription and fail they're blamed for not adhering CLOSE ENOUGH to the IMF/World Bank dictates.
The other main problem is that the Washington Consensus is being instituted in countries that simply do not have the institutions necessary for a free market economy including strong property rights, an established tax base and the means to enforce the rule of law. The shock treatment in Russia allowed money to flow freely in order to stimulate foreign investment but all it caused was the money to drain right out. The IMF/World Bank are very inflexible for instance they admonish countries for deficit spending, in order to stimulate the economy, even when a country has accrued a considerable amount of savings. At the same time the IMF/World Bank encourages low tax rates meaning that even modest economic stimulants can push a country into deficit spending. The scary thing is that even if a country doesn't currently have loans with the IMF/World Bank they can still fear bucking the Washington Consensus given that a poor report from the IMF/World Bank can potentially scare away foreign investments.
The author wisely points out that economic growth is only real if it is sustainable. American neo-conservatives love to crow about their pro-growth support but growth is pointless if you destroy the environment and rip up all the natural resources in a few decades. Using GDP as the de facto benchmark of a countries economic progress can be very misleading. As a case in point the author offers up oil production. The faster a country can rip oil out of the ground the higher its GDP will rise but in truth the country may well become LESS valuable as its resources are depleted. Compounded that with environmental damage, that isn't being factored into the equation, and a country can become poorer as its GDP rises. This is not just some abstract case but a situation that occurs frequently.
The author discusses a lot more topics including the often anti-democratic nature of the IMF/World Bank, issues of asymmetric globalization between developing and developed nations, the stifling nature of over patenting, subsidies versus tariffs. For an economics book I found it to be very readable and extremely enlightening. Mr. Stiglitz is clearly on the progressive side of the political spectrum which is evident by his concern for the inequity in globalization. Fortunately the IMF and World Bank seem to be adjusting somewhat to the reality that strict adherence to the Washington Consensus isn't the end all be all solution. Hopefully this is a sign that the times are a changin'. Hopefully.
41 of 49 people found the following review helpful
5.0 out of 5 stars A well-informed and thought-provoking work,
This review is from: Making Globalization Work: The Next Steps to Global Justice (Hardcover)
In this book, Stiglitz gave his advices on how to make globalization work for most of the population on earth: how the world - especially the developing countries - can reap the enormous benefits of globalization while containing the equally enormous problems -- problems well documented in his previous book "Globalization and Its Discontents" - that globalization creates.
The content of the book is well organized, its opinions well informed, and its ideas thought-provoking.
This book is really written from a high moral ground - putting the interests of the world's vast poor ahead of the special interests of wealthy Western corporations. Some may feel uncomfortable of this view point, and some may even attack the book. But having met with Stiglitz in person, I have enormous respect for his integrity and his sincerity in genuinely wanting to help make globalization work to benefit most people in this world. Highly recommended!
14 of 16 people found the following review helpful
5.0 out of 5 stars Very Helpful in Understanding Globalization,
Most discussion of globalization consists of uninformed opinion that is not worth listening to or reading. Not so with "Making Globalization Work" - the author is a Nobel prize-winner in economics and has worked at the IMF and the White House. He provides an excellent summary of the current problems with globalization, and a number of suggestions for improvement.
Stiglitz tells us that the world is in a race between economic and population growth, and so far population growth is winning - at least in absolute numbers of people, and especially when China is excluded.
The IMF is not democratic - the U.S. has effective veto. Further, it has focused on inflation, rather than wages, environment, unemployment, or poverty (recently it did make poverty reduction a priority). Advanced industrial countries (AIC) have been allowed to levy tariffs on goods produced by developing countries that were, on average, four times those on goods from other AICs. Developing countries were also forced to abandon subsidies for their nascent industries while AIC were allowed to continue their enormous agricultural subsidies. The top 1% of U.S. farms get 25% of the subsidies (averaging over $1 million/), while the bottom 80% get less than $7,000/. Thus, the program is NOT key to saving the family farm, and in fact hurts them more by increasing land prices that in turn require greater use of fertilizer and capital to utilize profitably. Further, the U.S. has used trade agreements to force patent protection for drugs (increasing AIDs deaths) and for eg. Microsoft.
Finally, Stiglitz recognizes that globalization does produce losers within the U.S., especially those with less education. He proposes more progressive taxation to support an improved safety net for those affected. However, my one criticism is that Stiglitz does not offer an estimate of what market equalizing wages would be like in the U.S. I suspect they would be so low and affect so many that it would destabilize our nation.
Free market development can be difficult - eg. firms using plastics or steel are not likely to develop without a local supplier, and those local suppliers look for assured demand before building. Further, banks are often less interested in leading to new industries than financing speculative real estate or lending to the government. Korea and Taiwan believe in the importance of free markets, but both stepped in to create world-class producers of steel (Korea) and plastics (Taiwan); meanwhile, during the early days of these industries they limited undercutting imports. Thus, "free enterprise" is not always the answer.
TIght money and budgets (the IMF prescription) were used to bring down hyperinflation in Russia after the USSR was broken up; this was accompanied by rapid privatization, resulting in a giveaway of its most valuable assets and quick capital flight (partly due to fear privatization would be reversed). Aftrica has fared poorly due to a less educated populace, less infrastructure, and less stability --> making it less attractive to investment. In addition, the Green Revolution did not take hold in Afrca as it had in Asia, and AIDs has ravaged the population. Failures of the conservative approach in Africa, Latin America, and Russia have also weakened democracy in those areas.
One of the main arguments for NAFTA was to close the income gap between Mexico and the U.S., and thereby also reduce illegal immigration. Yet, the disparity grew during the first decade by about 10%, and real growth per capita in Mexico was only 1.8% during the period. Mexican farmers now must compete with highly subsidized U.S. growers --> an increase in illegal immigration.
Exports, not the removal of trade barriers, is the driving force of growth.
GDP measures of an economy do not include sustainability - eg. resource depletion, borrowing from abroad), nor life expectancy.
China's 11th 5-year plan (3/06) shifted from exports (growing protectionism around the world) to greater domestic demand, as a means of utilizing its over 40% savings rate.
Corruption of campaign contributions by major corporations in the eg. U.S. is greater in magnitude of impact on democratic processes than the petty and pervasive small bribes paid government officials in developing countries.
8 of 9 people found the following review helpful
5.0 out of 5 stars A Blueprint for Successful Globalization,
In his sequel to his 2002 book, Globalization and Its Discontents, Joseph E. Stiglitz argues globalization is failing the 80 percent of the world's population who live in developing countries and the 40 percent who live in poverty.
The Nobel Prize winner and former World Bank Chief Economist's objection is not to globalization itself; but to how it is managed. Stiglitz argues the United States' exerts excessive influence on the system. When poor countries seek aid, this influence attaches counterproductive economic policies and lending conditions that often undermine the borrower's sovereignty. These requirements include massive privatization, spending cuts, lower import tariffs and exposure to volatile foreign capital. Stiglitz argues these conditions are precisely what developing countries don't need when they're in dire straits.
1. Reform of the dependence on Treasury securities, which he argues, funds U. S. over-consumption.
2. Worldwide regulation to would restrict activities and political instabilities that harm the environment. He would provide recourse when one nation's environmental actions harm other countries and compensation for maintaining their biodiversity, especially those with rainforests that spawn drugs and sequester carbon dioxide.
3. Oversight for Western banks and multi-national corporations. He argues that today's thick corporate veil relieves employees of moral responsibility. Part of the solution, he writes, is more leeway regarding worldwide class-action suits and more enforcement of intellectual property laws.
4. A shift of responsibility. Many of the problems of globalization management lies at the feet of poor countries. They must break the bribery cycle between their governments and international companies, sell their natural resources for a fair price, spend - and save - their money wisely and learn to manage currency fluctuations.
This is a thoughtful book from a thoughtful individual. . It adds debate over the role of governments in the free market by providing insightful appraisals of NAFTA, the WTO, the Kyoto Protocol and other elements of today's globalization debate.
7 of 8 people found the following review helpful
4.0 out of 5 stars sane but over optimistic,
Stiglitz reasons that most problems of globalization are related to exploitation of powerless or less powerful by the more powerful, specially US and to some extent Europe. He also blames international financial institutions like IMF for their dogmatic beliefs and resultant mismanagement of crisis in developing countries.
So far so good. The solutions proposed by Stiglitz are mainly moral appeals to the powerful to recognize their self interested pursuits and sacrifice for the poor to make the world a more fair and just place, which he asserts will make even the developed countries better off in the long run. Though he has indicated some efforts by east Asian countries to form institutions for self help, his appeal to reform global institutions depends squarely on the goodwill of developed nations.
The governments in all countries have their local voters to protect who naturally and, almost always, have a local point of view.It would be better if they all could think globally. But, how do we exhort them to think globally? Here, Stiglitz has missed the power of the reach of global media. Perhaps, the images of a immensely suffering poor can do more than rational appeals to make people think beyond their local interests.
I think he has also paid less attention to the changes which can be brought about by collective action of the developing countries.If Non Aligned movement can be rejuvenated, if the developing countries bargain collectively at world forums, if they can stand up to the threats by US
and Multi national corporations, may be they can tilt the balance in their favor.
However, this criticism is in no way intended to belittle the vast canvas of Stiglitz's project, his ability to judge the reasons of what plagues
globalization and courage to propose solutions which are sane and desirable but may not be to the liking of the powerful and take a very very long time to get implemented considering the basically self interested nature of human beings and nations.
I whole heartedly recommend the book to everybody interested in the well being of the poor of the world.
33 of 44 people found the following review helpful
3.0 out of 5 stars Really doesn't say that much,
The biggest problem with Making Globalization Work is that it's very light on actual content. Plenty of issues are dealt with at the level of mere assertions, simplistic models and examples, and there is much that amounts to making insider claims (according to Stiglitz, "the Clinton administration was engaged in a grand battle to enhance access to health care for Americans"). The gist of the book seems to be that globalisation can be made work better if we just make better policy. There are a couple of better sections in the book, namely the chapter on intellectual property (which is actually quite good), as well as bits on trade barriers and natural resources as a source of income. However, mostly even the good material's not very insightful or rich in information. If in some paper you must quote a Nobelist, you might be able to get that quote from this book, but for actually learning on the topic, you'd have to look someplace else.
Stiglitz seems to be saying that the organisations already in place, the IMF and the WTO, are essentially humanitarian organisations, and that they could therefore be used to push through and enforce better policy. There is limited criticism of the two in the book, mostly good intentions backfiring and abuses of the IMF and WTO by powerful interests. There is no serious analysis or argument why what "failed" in the past should work better in the future.
Stiglitz does stress the importance of democracy and transparency every now and then, even emphatically at times. This is important because many of his more concrete propositions, like making foreign aid to developing countries conditional on good behaviour, fail to convince especially with the limited elaboration of power relations and possible abuses. However, considering some of his examples, he's quite ambiguous and contradicts himself at times. He does talk about special interests benefiting from the current emission levels, meaning Big Oil and so on. But when talking about a tax on CO2 emissions, businesses and the people seem just as culpable; after all, corporations and consumerism are largely just for the good of the people. All this obscures and underplays the class aspect of globally acting concentrated capital. Stiglitz writes that "[o]ne of the main purposes of the WTO is to create a level playing field...", forgetting to mention it's a level playing field, on which the strongest businesses prevail, where costs will be universally minimized, where there will be even more sweeping exploitation of people and the environment.
In reading the book, I gave the author the benefit of the doubt every time I could, so my point here is not to look for malicious intent. The point is that, it's typical for a writer somehow misguided, not very well learned on a topic, or who otherwise just hasn't internalized many issues and their interrelatedness very well, to use ambiguous language, to have an anti-democratic expression slip in even when usually stressing the importance of democracy. All this makes the book of relatively little value. According to Stiglitz, production in developing countries is highly inefficient, and making it efficient means turning developing countries into top-of-the-line Western societies by having them skip over some phases of Western industrialization. Compared to the idea of actual leapfrogging, whereby developing countries would take the best of what the West and technology have to offer and combine that with what's good in their more organic societies, essentially creating new, different, and sustainable societies like there're no example of yet, Stiglitz's proposals translate into something else than an actually sustainable future.
"While increasingly more corporations see business social responsibility as a matter of good business, for many firms, their executives and employees, social responsibility is as much a moral issue as an economic one. Companies can be thought of as communities, people working together in a common purpose--say, to produce a product or provide a service. And as they work together, they care about each other, the communities in which they work, and the broader community, the world, in which we all live. This means that a company may not fire a worker the moment he is no longer needed, or that it may spend more money to reduce pollution than it is absolutely required to do by law. These companies may gain, of course, not just by avoiding the negative publicity described earlier; they may benefit from the higher quality labor force that they attract and improved morale: their workers feel better about working for a company that is socially responsible.... Regrettably, in a world of ruthless competition, incentives often work against even those with the best of intentions." pp. 198-199.
8 of 10 people found the following review helpful
4.0 out of 5 stars Very good (though a bit repetitive) follow-on to his previous work,
Readers of Stiglitz's previous book, "Globalization and Its Discontents," will notice that he covers familiar ground, especially early in the book and in Chapter 8 (The Burden of Debt). He also gets into some new areas (such as global climate change) and provides more depth in areas previously addressed (such as international trade agreements and the global reserve system). His examples (some new, some updated) are instructive, facilitating his cogent explanations of complex interactions in global economic behavior. To pick just one area: If you've ever wondered about what goes on at meetings with names like the Uruguay Round, the Doha Round, etc., - and why you should care - then read pages 74-81.
There are good reasons why you should read this book whether or not you read Stiglitz's previous book. Everyone interested in globalization needs to study a variety of perspectives, and this book may be the most balanced treatment available from a well-informed globalization critic. I've seen many writings that offer plenty of hand-wringing and finger-pointing, some taking the position that "globalization must be stopped and reversed NOW!" However, Stiglitz recognizes that globalization has the potential to do a lot of good, and that its negative aspects are mostly due to the fact that it's been managed badly. As the reader can determine from the book's title, his aim is to suggest solutions, which is more than a lot of authors do.
Not everyone will embrace his solutions, which rely heavily on new and existing international institutions and, in some cases, a degree of socially responsible international cooperation that has never been achieved in human history. Still, such suggestions need to be heard and debated. The scope of our global problems is unprecedented, and global solutions are called for. The time has come to start thinking and functioning at a new level, and Stiglitz emphasizes this throughout the book.
The writings of economists generally are not known for their gripping style, but fortunately Stiglitz is an exception to the norm - this book did not put me to sleep like all of my old college economics textbooks. It ranks near the top in my growing collection of books on globalization.
8 of 10 people found the following review helpful
5.0 out of 5 stars Another World: Making it work better,
Professor Stiglitz is an economics big gun - a Nobel Prize in Economic Science for 2001 is sufficient proof. A necessary proof is his scholarly guts to swim against currents, doing so repeatedly, successfully, and with enthusiasm. Such enthusiasm is evident from his two recent books: "The Roaring Nineties", and "Globalization and Its Discontents". With respect to Globalization and Its Discontents critiques have questioned whether or not by lambasting the some theories and practices behind globalization without providing substitutes Stiglitz wants to eat all his cake and save it all as well. This new book - "Making Globalization Work" - is an acceptable response.
The first two chapters describe another possible world in which globalization works better than in the current status quo (Chapter 1), and how development promises to contribute to that new world (Chapter 2). The next seven chapters are about obstacles and prospects that must be addressed to make globalization work. And how does anyone know that globalization is working? Globalization is working when and if it democraticizes the citizens of the world. Democracy is security. Security for the industrialized countries may be as simple as independence from "oil addiction"; for many developing countries it may be as mundane as freedom from hunger and diseases. The two judgments about security are interlinked in their implications for global people. These are issues Chapter 8 deals with.
This is characteristically Stiglitz. During the 1990s-early 2000s he was one of few famous economists who stood up to the Washington consensus, especially to its fundamentalist view of the godly power of markets under the guide of the Invisible Hand. Not only do markets fails to meet efficiency criteria (as when information is incomplete or imperfect); often efficiency is an insufficient condition for a good living. At the peak of their performance the socalled Asian Tigers and Dragons were not particularly efficient, but their rapid growth was accompanied by widespread equity.
"Making Globalization Work" strikes a healthy balance between normative economics and positive economics. This book is fine reading that would help the reader avoid junk economics of globalization and more. I was hooked four pages into the Preface of the book. You must read this book.
Modeling Income Determinants in Embedded Economies : Cross-section Applications to US Native American Economies
3 of 3 people found the following review helpful
5.0 out of 5 stars Fine analysis, but I think he knows that our rulers won't accept his reform proposals,
This review is from: Making Globalization Work (Paperback)
In this book, Stiglitz examines the failures of globalisation and of free trade, the intellectual property rights regime that puts profit before people, the pillage of resources, climate change, the multinational corporations' impact, the debt burden, the reserve system, and the attacks on democracy and sovereignty. He claims the problem is not globalisation but the way it has been managed.
He notes of globalisation post-1990, "unchecked by competition to `win the hearts and minds' of those in the Third World, the advanced industrial countries actually created a global trade regime that helped their special corporate and financial interests, and hurt the poorest countries of the world."
He points out, "the pursuit of self-interest by CEOs, accountants, and investment banks did not lead to economic efficiency, but rather to a bubble accompanied by massive misallocation of resources. And the bubble, when it burst, led, as they almost always do, to recession." This contradicts his later, curiously formal, argument, for capitalism: "Markets are essential; markets help allocate resources, ensuring that they are well deployed." No, profitably, not well.
Third World countries have got deeper into debt. Apart from China, poverty in the developing world has increased since 1980: 40% of the world, 2.6 billion people, are poor. The number of Africans in extreme poverty has doubled. In 2001 the USA and the EU agreed to focus on developing countries' needs. But, as Stiglitz points out, they reneged. He needs to ask, why don't proposed reforms ever work?
He observes, "the European Central Bank pursues a monetary policy that, while it may do wonders for bond markets by keeping inflation low and bond prices high, has left Europe's growth and employment in shambles."
He points out that current economic policy serves the interests of the ruling class. "Wealth generates power, the power that enables the ruling class to maintain that wealth."
He exposes the class conflict at the centre of economic life. He asks, "Where will the people of the developed countries and their governments stand? In support of the few in those countries who own and run the rich corporations, or in support of the billions in the developing countries whose well-being, in some cases, whose very survival, is at stake?"
His analysis is brilliant, but his proposals amount to calling on the ruling classes of the world to act against their own interests: he is proposing reforms he knows won't be accepted.
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Making Globalization Work by Joseph E. Stiglitz (Paperback - September 17, 2007)