Globalization and Its Discontents (review)

Globalization and Its Discontents is an indictment of the policies of the International Monetary Fund (IMF), the U.S. Treasury Department, and related international institutions that push dogmatic "free market" policies onto developing countries. Author Joseph Stiglitz is a former member of President Bill Clinton's Council of Economic Advisors, a former chief economist at the World Bank, and a winner of the 2001 Nobel Prize in economics.

Stiglitz repeatedly shows how the IMF and the U.S. Treasury Department (and less consistently, the World Bank) force weaker economies to do the opposite of what the United States has done and still does when faced with economic difficulties. While the U.S. itself practices deficit spending in times of downturn, the U.S. and the IMF force weaker economies to balance their budgets. In contrast to its own protectionism and major government subsidies for important industries like agriculture, the U.S. forces smaller economies to drop all protections and end all subsidies. Regardless of specific circumstances or national conditions, so-called "free market" solutions are forced on all dependent countries, even when clear evidence shows that such policies lead to further economic distress.

This book shows how the IMF worsened the Asian economic crisis of the late 1990s and devastated the economies of Russia and other formerly Communist countries which were forced to follow IMF/U.S. Treasury department advice. In addition, the economies of a number of Third World countries were undermined when they were forced into "structural adjustment" programs that were simply cookie-cutter applications of Milton Friedman's economic theories.

Stiglitz attributes these policies to misguided but fervent ideological beliefs on the part of those governing these agencies, and to the enormous power of the financial sector (like Wall Street and U.S. banks) over these agencies. He would like to see a return to less ideological policies promoting Keynesian counter-cyclical fiscal measures, gradual transitions toward freer markets rather than rapid jolts, and more involvement by the countries and peoples affected in devising the policies they will pursue.

While he is critical of the "market fundamentalism," Stiglitz does not share the full critique of those in the global justice movement. He is a strong supporter of globalization, NAFTA, many instances of privatization, and the like, as long as they are done properly. And "properly" means gradually, with cushions for the vulnerable, arrived at via democratic means. Stiglitz wants to humanize corporate-led globalization, not to destroy it.

Stiglitz's critique of market fundamentalism is devastating, and the humanity of his intentions is clear. The question of whether his humanistic alternatives are realistic within his ideological framework given the power realities of U.S. capitalism is more problematic. As he has repeatedly found, good arguments mean little when vested interests of powerful U.S. financial interests are at stake.

This book makes very few references to labor, organized or otherwise. It will probably find limited use in labor studies classes, although it is a worthwhile source for background on the worldwide conditions under which labor movements struggle for justice.