"Making Globalization Work" by Joseph E. Stiglitz

Reviewed by Mikihiro Maeda (Administrative Chief, Japanese Institute of Global Communications, International University of Japan)

Review:

It is well known that Nobel Prize-winning economist Joseph Stiglitz has been a strong critic against the widely held idea, especially in the U.S., that globalization is beneficial to everyone and will give wealth to all people by breaking old customs and pursuing economic efficiency. In his previous book, "Globalization and its Discontents" (2002), Stiglitz tried to show why globalization has not benefited as many as people as it could and should have by pointing out various flaws and failures in international systems and organizations pushing the trend of globalization in the past. It is needless to say that as an economist, he does not reject globalization per se, but severely criticizes the way it has been managed in the past.

Now that many of the global issues resulting from globalization seem more serious and pressing, at least from Stiglitz's standpoint, he has written a sequel to the previous book, and it is appropriately entitled "Making Globalization Work," in which he proposes specific ways to deal with such global issues as world trade problems, resource shortages, intellectual property regimes, global warming, multinational corporations and third world debt burden by reforming international systems and organizations. In particular, he examines global reserve system reforms and how globalization should be "democratized" based on his experiences not only in both academic and public sectors, but also from his time spent on the ground in various countries and regions, especially in Asia.

For instance, the author lists the major elements of reform packages including the following: "Changes in voting structure at the IMF and World Bank by giving more weight to the developing countries," "Changes in representation" to those who know something about the matter quite well should be at the table, "Adopting principles of representation," "Increased transparency," "Enhancing the ability of developing countries to participate meaningfully in decision making," "Better judicial procedures," "Better enforcement of the international rule of law" etc.

A unique feature of Stiglitz's proposals is the fact that he apparently makes full use of his knowledge and information regarding East Asia's experiences and experiments in reforming its regional economic and monetary systems. For example, in the section of "East Asia" in chapter 2, he appreciates the way globalization is managed in East Asia by saying that "in the form of export-led growth, globalization helped pull the East Asian countries out of the poverty," and "globalization made this possible and it was their ability to take advantage of globalization, without being taken advantage of by globalization and these countries simultaneously achieved growth and stability." More specifically, Stiglitz takes up China and Vietnam, and maintains that "even during the downturn 1997-98, these two countries continued to grow and they focused not only on price stability but on real stability, ensuring that new jobs were created in pace with new entrants to the labor."

Actually, Stiglitz's pro-Asia and anti-Washington stance is quite apparent, as he mentions that "At the peak of the crisis, Japan proposed establishing an Asian Monetary Fund and generously offered to put in $100 billion to help finance it," but "the United States and the IMF did everything they could to stop this; both were worried that an Asian Monetary Fund would undermine their influence in the region and were willing to put their own selfish concerns above the well-being of those countries." This statement could be interpreted as the author's endorsement for establishing a new international financial institution based on 'East Asian Consensus' rather than the "Washington Consensus" as a part of reform to manage globalization in the future.

Joseph E. Stiglitz is one of the world's best known economists and he was Chief Economist at the World Bank until January 2000. Before that, he was Chairman of President Clinton's Council of Economic Advisers. He won the Nobel Prize for Economics in 2001 and is currently Professor of Finance and Economics at Columbia University.

References:
1. "Making Globalization Work" (Main Page):
http://www.wwnorton.com/catalog/fall06/006122.htm
2. "Sekaini Kakusawo Baramaita Gurobarizumuwo Tadasu" (Japanese Translation; December, 2006):
http://www.tokuma.jp/book/tokumabooks/1176094017486