"Globalization and Its Discontents"

by Joseph E. Stiglitz

Reviewed by Takahiro Miyao (GLOCOM)

Review:

Broadly speaking, there are two kinds of economists in the U.S. One may be called "market fatalists," and the other "policy activists." The former is in the Chicago school tradition, favoring business and the Republican Party, and the latter in a more liberal tradition of Harvard and MIT in favor of government and the Democratic Party. There is no doubt that the author of this book, Joseph Stiglitz belongs to the latter.

Since "globalization" is a market force that no one could resist, market fatalists would only accept the trend and even facilitate it, whenever possible. On the other hand, policy activists would resist such a movement and try their best to change its course by public policies: this is what Joseph Stiglitz is doing about the trend of globalization in this book.

The most impressive point made by Stiglitz is his reference to the Great Depression. He says that "today, the system of capitalism is at a crossroads just as it was during the Great Depression. In the 1930s, capitalism was saved by Keynes, who thought of policies to create jobs and rescue those suffering from the collapse of the global economy. Now, millions of people around the world are waiting to see whether globalization can be reformed so that its benefits can be more widely shared."

After criticizing such international institutions as the IMF and the World Bank, Stiglitz proposes fundamental changes in policy stance among "those in the Washington establishment," calling for more regulations on capital movement and more active fiscal policies for the sake of those countries that are under speculative attacks in the process of globalization.

We can learn a lot from Stiglitz' argument in order to change the policy stance of the current administration that seems to be dominated by the philosophy of "market fatalists," single-mindedly advocating free capital movement and tight fiscal policy.

The following is from the publisher's website: http://www.wwnorton.com/catalog/spring02/005124.htm

"Globalization and Its Discontents" by Joseph E. Stiglitz

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.

This insider's account of global economic policy making will be hailed as much for its courage and honesty as its depth and insight. Renowned economist and Nobel laureate Joseph E. Stiglitz spent seven years in Washington, serving as chairman of Clinton's Council of Economic Advisers and as chief economist for 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.
Stiglitz had a ringside seat for most of the major economic events of the last decade, including the Asian economic crisis and the transition of the former Soviet economies, as well as the administration of development programs throughout the world. Repeatedly, he saw policy makers wedded to outdated economic models and using "Washington consensus" doctrines based on them to design policies that had disastrously bad results. He also discovered within the major institutions of globalization a damaging desire for secrecy that exacerbates the mistakes at the same time as it inhibits positive change.
This book recounts Stiglitz's experiences, opening a window on previously unseen aspects of global economic policy. It is designed to provoke a healthy debate and will succeed in this goal even as it shows us in poignant terms why developing nations feel the economic deck is stacked against them.

The Japanese translation of this book is entled,
"Sekai o fuko nishita gurobarizeishon no shotai,"
published by Tokuma Shoten in 2002 (ISBN 4198615195).