Globalization And Its Discontents [Paperback]

If you're looking for an overview of the latest round of worldwide economic integration ("globalization"), or the protest movement that has arisen in its wake (the "discontents"), you won't really find it here. There's very little discussion of the fundamental issue surrounding globalization--the pros and cons of vastly expanded international trade. You won't find more than a few passing references to the World Trade Organization, for example, or to the 1999 WTO conference in Seattle that marked the birth of the anti-globalization movement.

What Stiglitz does offer is a devastating critique of a different organization, the International Monetary Fund. "Write about what you know" is always good advice, and the author follows it here. As a former Clinton administration economic advisor and later an official at a rival organization, the World Bank, Stiglitz has a few scores to settle. He takes dead aim at the so-called "Washington Consensus"--the notion peddled by the IMF and U.S. Treasury in the 1990s that privatization, deregulation, open capital markets and balanced budgets would be a panacea for developing countries.

The Nobel Prize he garnered in 2001 for his work on market failures lends Stiglitz additional credibility as he rips to shreds the IMF's blind faith in markets--particularly free-flowing capital markets. He argues convincingly that IMF policies made the 1990s financial crises in Asia and Russia worse. And he raises many worthy questions about whether certain constituencies (namely the financial services industry) have a stranglehold over international institutions that should be serving the common good.

Most readers will emerge easily convinced that the IMF needs to be reformed and reoriented. What's missing from Stiglitz's book is any sense of whether that would be enough.

One suspects there is a need for a much broader agenda to address the defects of globalization, and to assuage its discontents. But one will have to look for it elsewhere.

Mr. Stiglitz, a Nobel Prize economist and formerly chairman of President Clinton's Council of Economic Advisers and chief economist at the World Bank, is uniquely positioned to offer insight into the workings of globalization. Sadly, he has chosen to focus his energies on a very narrow field (how the IMF and the US Treasury Department handled the Asian Financial Crisis and Russia's transition from communism to capitalism) and write about it in a self-righteous tone, so much so that his message is often diluted.

All the same, Mr. Stiglitz raises some valid concerns, primarily about the narrow focus that plagues many Western economists, who favor some policies (particularly macroeconomics) while not paying attention to others (such as property rights and institutions). Mr. Stiglitz's caution against market fundamentalism should be taken seriously by those who wish to maintain a broader picture of globalization.

But in the end, Mr. Stiglitz's tone and bias undermine his own argument. From the outset, he makes clear that the world is occupied by concerned government leaders who care for their people and by IMF economists who care about statistics and financial interests while disregarding human concerns such as poverty and employment. Perhaps this has something to do with the fact that the former were always more receptive to Mr. Stiglitz's arguments than were the latter.

When Mr. Stiglitz writes about economics, he is clearly at his prime. But maybe he should have waited a few years and produced a more balanced assessment of his years in the World Bank-then, we would have benefited more from the clarity of his thoughts rather than the opacity of his rage.