Globalization and Its Discontents

by Joseph E. Stiglitz

Our world is changing. Globalisation is not working. It is hurting those it was meant to help. And now, the tide is turning...

Explosive and shocking, Globalization and Its Discontents is the bestselling expose of the all-powerful organisations that control our lives – from the man who has seen them at work first hand.

As chief economist at the World Bank, Nobel Prize-winner Joseph Stiglitz had a unique insider's view into the management of globalisation. Now he speaks out against it: how the IMF and WTO preach fair trade yet impose crippling economic policies on developing nations; how free market 'shock therapy' made millions in East Asia and Russia worse off than they were before; and how the West has driven the global agenda to further its own financial interests.

Globalisation can still be a force for good, Stiglitz argues. But the balance of power has to change. Here he offers real, tough solutions for the future.

Genres: Economics, Nonfiction, Politics, History, Business, International Relations, Sociology

288 pages, Paperback

First published January 1, 2002

About the author

Joseph Eugene Stiglitz, ForMemRS, FBA, is an American economist and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is also the former Senior Vice President and Chief Economist of the World Bank. He is known for his critical view of the management of globalization, free-market economists (whom he calls "free market fundamentalists") and some international institutions like the International Monetary Fund and the World Bank.

In 2000, Stiglitz founded the Initiative for Policy Dialogue (IPD), a think tank on international development based at Columbia University. Since 2001, he has been a member of the Columbia faculty, and has held the rank of University Professor since 2003. He also chairs the University of Manchester's Brooks World Poverty Institute and is a member of the Pontifical Academy of Social Sciences. Professor Stiglitz is also an honorary professor at Tsinghua University School of Public Policy and Management. Stiglitz is one of the most frequently cited economists in the world.

Reviews

[Baba · Rating 4 out of 5]

Insider Joseph E. Stiglitz's controversial exposure of what globalisation is/was doing wrong especially in regards to the Developing World. Drawing on his personal experiences under President Bill Clinton and at the World Bank, he explains how he became disillusioned with global institutions like the IMF and World Bank because of their treatment of developing countries. Stiglitz argued that their policies are based on neoliberal assumptions that were fundamentally unsound.

As a son of parents from the Developing World, I wasn't surprised by this damning read, and was just happy that a voice from the inside was saying out loud, what to me is obvious, that the WTC, G7, IMF, World Bank etc. are all institutions run to maintain the status quo of Western dominance. It's been really interesting growing up in world where the likes of China and India have began to seriously counter weigh this. A Must Read book on economics.. seriously! 8 out of 12.

2007 read, 2003 read

[Whitaker · Rating 4 out of 5]

Update, 4 January 2012

I just stumbled across this Open Letter to Joseph Stiglitz by Kenneth Rogoff writing as Economic Counsellor and Director of Research, International Monetary Fund. Rogoff is also the author and researcher of the excellent This Time is Different: Eight Centuries of Financial Folly , to which I gave five stars.

However one swings on this debate, Rogoff's lively rejoinder to this book is, I think, essential reading. If nothing else, it's a good reminder to me to check my own confirmation bias. I'm not going to pretend I know enough to referee a debate between these two great minds. I do think, however, that if you've just read this book or are intending to read it, do see what the other side has to say in its defence. It's the least natural justice would require.

Original Review

It's not a great book, but Stiglitz provides a very useful history of the last 30 years from the perspective of how the IMF dealt with (or rather failed to deal with) financial crises as they erupted around the world. Its strength is the comparative, case study approach: Russia did it this way, China did it this other way; Brazil did it this way, Poland did it this other way. Let's look at which methods worked better. Sort of like an MBA in macro-economics in other words, where instead of looking at case studies of corporations you lo0k at case studies of countries. The main downer was the somewhat bash IMF tone, and Stiglitz gets somewhat repetitive towards the last couple of chapters.

I liked it. I thought it was a nice summary. Most of the stuff I already knew in a general way, so I can't give it five stars. Nevertheless, four stars for the following points that Stiglitz makes:
• The IMF is not some conspiring beast in bed with grasping financiers to make them richer. It's simply blinkered by a certain ideology where its economic beliefs have hardened into doctrine. And don't think businesses are any better. Many many enterprises have floundered on foreign shores, unable to adapt to the different ways of thinking there. No, Toto, you're not in Kansas anymore.
• Sequencing and pacing matter. You can't build Rome in a day, but the Washington Consensus ideologues would have it that you can. Presumably, they also think that the best way to build a skyscraper is to simultaneously throw steel bars, concrete, glass, and metal plates into the air and it'll all come down into a pretty 80-storey building.
• It's the reality, stupid! Look at the evidence and the data. When prescribing a certain development route, compare apples with apples. Countries are not alike, and financial crises are not alike. What worked in one situation may not work in another. So, we all know a wood fire is best put out with water, but try that on an oil or electrical fire and you're going to have trouble. The IMF, however, would beg to disagree.
• You need a holistic view of the problem based on a hands-on understanding of the situation on the ground, and not based on an ivory-towered mathematical formula. The best example I have of this from the book is classical economists thinking that foreign lenders rush in where indigenous angel investors fear to tread: they think that raising interest rates in a severe recession is good because while it might destroy internal business confidence and turn solvent companies insolvent, foreign investors attracted by the higher returns will come in droves to lend to the impoverished, bankrupt businesses. Err… really? Only on Planet IMF I would say.
• Unlike Dame Thatcher's famous remark that society does not exist, society not only exists, it matters. The social fabric is not what just keeps societies together, it's what keeps societies running and producing. Social chaos is not just bad for society, it's bad for the economy as businesses stay away from unstable countries and don't invest in them. And social trust once destroyed does not come back overnight. Imagine doing business with your ex who cheated on you. That's kind of what the IMF thinks can be done. NOT!!!
• A market is a culture. Attitudes to employment, to entrepreneurship, to investing and using capital, these are not just things you can learn from a book. You can't take 10 million Russians, plonk them in an abandoned New York, and expect New York to remain New York with just a teeny difference in language. The workings of banks, the NYSE, the insurance companies, the businesses, all of these are culturally embedded in social mores and beliefs, culture in other words. That kind of soft skills and hard wiring take generations to take root.

What Others Thought

NYRB: Stiglitz has presented, as effectively as it is possible to imagine anyone making it, his side of the argument, including the substantive case for the kind of economic development policies he favors as well as his more specific indictment of what the IMF has done and why. His book stands as a challenge. It is now important that someone else—-if possible, someone who thinks and writes as clearly as Stiglitz does, and who understands the underlying economic theory as well as he does, and who has a firsthand command of the facts of recent experience comparable to his—-take up this challenge by writing the best possible book laying out the other sides of the argument. What is needed is not just an attempt to answer Stiglitz's specific criticisms of the IMF but a book setting out the substantive case both for the specific policies and also for the general policy approach that the IMF has advocated.

[beggs · Rating 4 out of 5]

I picked up Joseph Stiglitz book in the same purchase I got Naomi Klien’s No Logo and Peter Singer's One World. Obviously there is an interest in globalization in that recipe. I’ve been reading The Economist ([http://www.economist.com]) for some years and been mildly informed on globalization and the backlash against it evident in the protests against the IMF, World Bank, G7/G8, WTO and other multinational bodies associated with it. I didn’t really develop an interest in globalization until I read The Best Democracy Money can Buy by Greg Palast.

Palast’s book wet my appetite but Stiglitz, who was President Clinton’s economic adviser before joining the World Bank, really lays on the blame. He places most of the blame for the Asian Financial Crisis, the Russian collapse, and Argentina’s Defaulting, on the IMF. More specifically he claims that a shift away from the Keynesian ideas that the IMF and World Bank were founded on is to blame. What caused the shift? The introduction of Thatcherism and Ragantonian ideals, the ousting of experienced economist and the promotion of free market fundamentalist at the IMF.

To support his accusations Stiglitz roams around the globe from one crisis to another pointing out the faults in the blind, ideological, one-size-fits-all prescriptions the IMF doled out to country after country in the past 25 years. Time and again the IMF’s blind belief in the Market becomes a vehicle for greed and capitalist hegemony. To back up the point that the IMF refused to learn from it’s mistakes and the experience of others Stiglitz points out several countries that refused to follow the IMF plan, and shows that while their development has not been as smooth as could be desired and they have not developed as fast as the IMF says they could, they have avoided the painful problems of many of the IMFs poster child countries: Thailand, Argentina, Russia. And stand better today than many of the countries who followed the IMF plans.

I found the section of the Asian Financial Crisis the most poignant because shortly after I finished the book I traveled to Bangkok, the epicenter of the crisis. The problems that began in Bangkok when Thailand opened it’s market to ‘hot money‘ ([http://en.wikipedia.org/wiki/Hot_money]) are always recalled as something that happened ‘over night.’ How true those statements are really became apparent when I was in Bangkok. The skyline is filled with half completed skyscrapers and rusting cranes that have sat empty since 1997. Many construction sights literal closed the doors one night and never opened them again, putting hundreds of workers on the street over night.

After nearly a decade Bangkok is just beginning to recover from it’s nightmare. If Stiglitz is to be believed the IMF leadership, which shares a large part of the blame because it pushed questionable policies faster than was advisable and without tailoring them for local conditions, has not learned its lesson. Stiglitz acknowledges that the goals of the IMF, the goals of Globalization, are not inherently bad, and need not lead to the problems that we have seen. Rather it is the way the IMF uses it’s political power and money to force these ideas on countries that are not ready for them that has lead to so much suffering and poverty.

Globalization is not a new movement, it is the as old as civilization. It is the force that sent caravans down the Silk Road and the wind that launched the Niña, the Pinta and the Santa Maria across the Atlantic. The goal now should be to move forward in a way that does not destroy entire societies so that a few rich people can get richer. Modern globalization was sold to the world as a way to bring the poor into a better world. It has, to a large extent, made many of their lives worse while being hijacked to make the rich richer.

[Noah · Rating 3 out of 5]

A critique of the way that globalization had proceeded up to 2002, focusing largely on the East Asia Crisis and Russian Shock Therapy. Stiglitz argues that the policies enforced by the international financial institutions (the IMF takes the brunt of his criticisms) are politically, economically, and morally problematic. In their adherence to budget austerity and overemphasis on inflation, they eliminate the social safety nets that make radical economic/social reforms sustainable in the long term. In their dogmatic belief in "market fundamentalism" they fail to attend to the unique factors in different countries, imposing a single model (which Stiglitz claims was largely developed to address the conditions that arose in the 1980's in Latin America) in very diverse situations. Additionally, in their inflated faith in markets' ability to correct their own mistakes, they fail to implement the financial and legal institutions that undergird and make a market economy possible. Finally, with leaders and advisers who are taken from (and often return to) the private financial community, the policies enforced by the IMF privilege the short-term interests and returns of Western investors in developing markets over the sustained development of those markets, with often drastic consequences for those developing economies and the people whose lives depend on them.

[Adam · Rating 4 out of 5]

Very good, and a must read for anyone interested in globalization from the point of view of the globalizers (albeit a dissenting one), though obviously one should read books from the point of view of the "common folk" before this. Unfortunately, this book is kind of a hit piece on the IMF (which is where it shines, Stiglitz is hardly a socialist so his critiques are more effective), but Stiglitz worked for the semi-rival World Bank, and he constantly is excusing the World Bank's misdeeds and concentraing on the IMF. So you start to wonder if you're getting the whole picture. But, I mean, if we're talking about globalization you've got to talk about the whole thing. This should've been titled, Globalization: The IMF Sucks, World Bank Rules.

[Zuzana Kubáň]

I would rather not rate this book as it describes the world economy and the IMF’s role in it - a topic that I am not sufficiently well versed in to say how does it rate in terms of accuracy or compare to other similar books.

Though from my personal view, the book felt like a great introduction into this topic, as it described everything, explained it properly, and gave clear examples. Moreover, the author also adopted a broad focus, focusing on countries all over the world.

On the other hand, I am also somewhat “suspicious” about the book as the author was very critical of the IMF and other big financial institutions. But while doing that, I felt as if he was trying to clear his record, as if ignoring the part that he was and to a large extent is, still part of this large institutions and hence part of the problem.

At the same time, if someone wants to understand the global economy and the institutions that largely control it, I’d definitely recommend this book.

[Andrew]

Joseph Stiglitz is the sort of thinker who can appeal to pretty much everyone on the political spectrum, conservative, liberal, and leftist. While those on the right will probably have a problem with his disapproval of laissez-faire economics, and those (like myself) on the left will take issue with some of his more market-oriented solutions, he is above all else, a sane, rational commentator. His thesis is quite simple: before putting forth any platform, we need to examine the economic disasters caused by IMF policies in, among other places, Russia, Thailand, and Argentina. And, well, fuck the IMF. Good show.

[Alexandru · Rating 5 out of 5]

Joseph Stiglitz is a former Chief Economist of the World Bank, Chair of the Council of Economic Advisers under President Bill Clinton and also a recipient of the Nobel Prize for Economics. In Globalization and its Discontents he criticises the policies employed by the IMF and the World Bank in the 1980s and 1990s and their role in creating havoc in many developing countries as well as in the 1997-1998 financial crisis.

Although the book was first published in 2003 it is still worth a read in order to understand the shortcomings and failures of the IMF, the World Bank and the WTO.

Stiglitz looks at the IMF policies in Asia (for example in South Korea, Indonesia or China) and in the post-Communist regimes in Eastern Europe (for example in Poland, Russia or Romania). In Asia he specifically focuses on the role the IMF played in triggering the 1997-1998 East Asian financial crisis. In Eastern Europe he focuses on the shock therapy policies implemented in Russia which led to economic collapse, the asset stripping of formerly state owned companies and the creation of the oligarchs.

What is interesting is that Stiglitz dispels the myth of a conspiracy theory behind the motives of the IMF. In fact all of the policies of the IMF are based on their conviction that their neoliberal doctrines are correct and will lead to economic benefits. He calls the ideologues of the IMF as the 'free market fundamentalists'. Their policies were based on rapid privatisation, capital market liberalisation and low inflation.

In order to assess the impact of these IMF policies Stiglitz compares the effects on economies that adopted all of them and the economies that only adopted part of them or even none of them. For example, China did not adopt the IMF recommendations and as such was able to withstand the effects of the financial crisis. In Europe, Poland and Hungary did not adopt all of the IMF recommendations and adopted a gradualist privatisation regime. As a result, their economies did not suffer so much in the 1990s compared to Russia which adopted all of the policies.

It is essential to note that Stiglitz is not against privatisation, or against capitalism or even the IMF. But rather he is against the free market fundamentalism and the inflexible economic doctrines adopted by the IMF. He believes that countries would be better served by gradualist and controlled policies.

This book is worth a read for anyone interested in economic history and in understanding the workings of the global financial institutions.

[Prem · Rating 3 out of 5]

This title is a bit of misrepresentation - Stiglitz spends almost the entire book focusing on the market fundamentalism of the IMF, the damage its policies do to developing countries and the US' ideological and political support of the IMF and special financial interests through realpolitik. It has much less to do with the much broader currents of globalization as we know it. 
Stiglitz is, however, still a liberal economist (partial to neo-Keynesian economics) who believes in the power of a market economy as a solution to poverty, albeit one well-regulated through government intervention. And he treats pol-econ ideology as a settled question (which may partially be the consequence of the Fukuyama-esque 'end of history' moment this book was written in, in the late 90s/early 2000s). So while I fundamentally disagree with his affinity towards privatization and marketization, there are several useful insights here into the actual functioning of transnational economies and the (political, financial, and private) powers that influence them that are important to know.

[Rowena · Rating 3 out of 5]

I read this some time last year and I was in shock by just how heinous the IMF,World Bank and WTO were regarding developing countries. Very informative book.

[Luís · Rating 4 out of 5]

Joseph E. Stiglitz - Visionary.

[Alejo López Ortiz · Rating 3 out of 5]

Mucha agua ha corrido debajo del puente desde que Stiglitz escribiera en 2002 este libro. Hoy sin duda tenemos muy claro cada uno de los argumentos que esgrime el autor y que hace 18 años aún no eran tan obvios.


Difiero un poco de Stiglitz en su idea concebida de refundar las instituciones financieras desde adentro. Es claro que el sistema es corrupto en su totalidad y que serán nuevos jugadores los que puedan modificar las reglas del juego, pero con otras instituciones y con otros modelos de globalización. Pensar en el yerro del FMI, BM y OMC como meros accidentes ideológicos es querer tapar con un velo el agotamiento del modelo capitalista y su vertiente financista que ha dominado las instituciones económicas alrededor del mundo desde hace muchas décadas.

Para quienes no conocen mucho de economía, el libro no es un obstáculo. Su lenguaje es de fácil comprensión y abre mucho la mirada sobre este régimen de globalización que nos domina.

Me quedo con una de las tantas frases que me gustaron del libro: "El cambio más fundamental requerido para que la globalización funcione como debiera es un cambio en la gobernanza".

No creo que sea una gobernanza al interior de las instituciones económicas mundiales. No creo que baste con equilibrar la toma de decisiones. Algo hay que hacer de fondo. Quienes han dominado estas décadas de crisis, desigualdad y perdida de ingresos deben entregar el bastón de mando. Estados Unidos, wall Street y el mundo financiero no pueden liderar un nuevo modelo de gobernanza porque son ellos, propiamente, el problema.

[Florin Pitea · Rating 5 out of 5]

Well documented, informative and eye-opening. Highly recommended.

[Phillip · Rating 4 out of 5]

Generally a good description of the way in which IMF and US Treasury policies have played out in the developing world from the 1980s to 2002. Broadly speaking, these institutions have done their best to serve US and Western financial interests, rather than seeking a benevolent and mutually beneficial globalization, despite the IMF's mandate to promote international economic stability and growth. Of course, one of the big problems with these policies is that they don't actually serve the interests of the US, they only serve the interests of a small collection of economic elites who arrange everything so they can accrue more personal wealth at the expense of not only citizens of the global south but also citizens of the US and the global north.

David Harvey points out that Stiglitz assumes that the inequalities and the poor management of economic globalization under the auspices of neoliberal ideology are a byproduct of poor choices. Harvey suggests that the upward redistribution of wealth within and across nations may actually the the hidden purpose of this ideology. The goal, in other words, is not actually to eliminate poverty or create a more equitable system, but is in fact the re-establishment of class privilege. While I think people like Freedman probably didn't have this intention, I suspect the workings of international finance and exploitative late capitalism is probably more conspiratorial than Stiglitz allows. A point I find particularly interesting because he twice mentions and dismisses suspicions from East Asia and then Russia that the IMF, World Bank, and the west had conspired to ruin their regional/national economies in order to eliminate global competition.

The other big issue with this book is that Stiglitz doth protest too much, as the poet once said. He spends a lot of time explaining that he opposed these disastrous policies and tried unsuccessfully to get people to listen to his warnings. But seriously? You held incredibly important positions as a World Bank chief economist and Clinton-era economic adviser and nobody would listen to you? While I have no evidence to back this up because I don't know enough about Stiglitz, he seems to spend a suspicious amount of time repeating that he, the World Bank, and the Clinton administration weren't behind the imposition of neoliberal policies, and tried to stop the diabolical IMF and US Treasury from implementing these policies.

[Dan · Rating 4 out of 5]

so... last year i decided i was gonna get my feet wet in the world of economics - and specifically development economics. i read some stuff by theory types i was interested in anyway (mike davis, david harvey), i read the shock doctrine, i read the end of poverty and i looked to paul krugman (and others) as the american financial system took a nosedive into the shitter.

globalization and its discontents is the best of the bunch so far. it's *really* informative - not to mention level-headed, clearly-written (though dry in a way that's unavoidable when you're talking about interest rates) and super pragmatic. stiglitz is a nobel-prize winning economist who once worked for the world bank, and he pissed a lot of people off when he published this book. which makes it sound radical, but that's not quite right. stiglitz is in favor of a regulated market, with strengthened social services, checks, balances, etc. as such, he avoids sensationalizing or romanticizing the issues he addresses. on the whole, he treats globalization as something neutral, choosing instead to examine the ways its name has become synonymous with the free market fundamentalism of the "washington consensus," and what to do to alter its course, accordingly. his critique of these very powerful clubs is rigorous and multi-faceted. i'm not a naomi klein hater by any means (i thought her shock doctrine raised some much-needed questions), but this book kinda blows it out of the water in the research department (even if it's not as much of a page-turner).

my only complaints are minor ones. stiglitz touches on some big issues towards the end, mostly in regards to medical discoveries (bio-piracy, etc.) and the environment. on account of these two problems in particular, i feel somewhat unconvinced by his VERY, VERY guarded optimism about a market system, and i wish he'd explored some of the complications he notes briefly toward his conclusion more thoroughly.

highly recommended to anyone trying to get a sense of how money flows globally.

[Ram Kaushik · Rating 4 out of 5]

First, the positives. Stiglitz is an enormously important voice in the modern economics world, and has mentored the likes of Paul Krugman and other Nobel laureates. This book is a second edition with reflections on the rise of demagogues around the world, and the implications on globalization. Stiglitz lays out a compelling case that although globalization is an extremely desirable ideal for rising living standards for all countries, if the fruits of the increase in wealth are shared as inequitably as today, the entire project is doomed to failure. His new material (and especially the concluding chapters) are cogently argued and left me both better educated and more pessimistic about the future. He suggests fundamental strategic changes to development goals and public policy, none of which look politically viable because of the entrenched interests against them.

The negatives: we get it, Prof. Stiglitz - the IMF is a particularly dangerous organization that has left global chaos and mayhem in its wake. Repeating it ad nauseam does not strengthen the argument any. For entertainment, google the IMF's virulent response in the form of noted economist Kenneth Rogoff's response. Who knew economics conferences could be like a fishmonger wives fracas? The chapters on the IMF's colossal failures in Russia and Southeast Asia are illuminating, but smell a little like 20-20 hindsight. Much more troubling to me was Stiglitz connecting the dots between these purportedly non-partisan organizations and their financial sponsors in the banking community in the U.S. and developed world. When its the third-world, its corruption but if its the first world, it is "lobbying"! Also, the professor's self-assurance that he was right all along at all times, gets a little grating.

All in all, I found this a very important book, especially for this era - and one I suspect some Democratic presidential candidates in the U.S (at least policy wonks like Elizabeth Warren) will take very seriously indeed.

[Mark Lawry · Rating 4 out of 5]

Recommended to me by someone who I had believed was against globalization. Yes, I’m a huge advocate of globalization so in the interest of reading those who I don’t agree with I read it. It turns out Stiglitz is very much not anti-globalization but wrote the book explaining why some might be. He starts out explaining that he believes globalization is a very powerful tool to improve our lives, that privatization, and market liberalization are very powerful tools. Then spends much of the rest of the book explaining why he believes the IMF pushing these policies too fast caused the Asian economic crisis of the 1990s. A major issue in the book was how fast should the Soviet block countries transformed from communism to market economies? Stiglitz explains there were those that believed in “Shock therapy” (of which I am one) against what he calls “gradualists.” Stiglitz is very much a gradualist and believes the IMF pushing market reforms too fast caused problems. One reason to read the book is he does a great job of explaining how really bad off the Soviet system left Russia back in 1989 and the overwhelming problems the country faced. I think another take away from the book is the fact that there are a lot of very smart minds thinking about how to improve lives. It is a very difficult, complex, while yet challenging topic. Very smart people with the very best of intentions (and I believe most all do) can have very heated disagreements on how to make good things happen. The debate is worth the effort. A must read for anyone interested in development or international finance.

[Daniel · Rating 5 out of 5]

I read the first edition 10 years ago. Then it was about global discontents in developing countries. This new edition contain added parts talked about discontents in developed countries.

Previously people were unhappy because hot money went in, causing inflation and raise prices of developing countries, and when it went out caused economic crises. On the other hand, Foreign Direct Investment did improve the livelihood of many.

So the rules of globalisation were written by corporations for the benefit of corporations. With trade tariff greatly reduced, and shipment costs low, and easy investment flow allowed, corporations moved production to countries with cheap labour, and then sell products to consumers at a low price. So manufacturing jobs started to move overseas, and workers in rich countries suffered.

He criticised strongly the other economists’ over-selling of free trade. However, he posited that Trump’s protectionism and trade wars would only hurt the rich world discontents.

Stiglitz suggested a few ways to boost well being of the rich world discontents:

1. Tax more, spend more: balanced budget. Tax rich people more.
2. Protect the poor
3. Invest in people, infrastructure and technology
4. Encourage savings
5. Global reserve currency so American dollar drops, improving competitiveness
6. Buffett’s trade chit proposal. Any exporter gets a chit; any importer needs to buy a chit to import.

I am a fan of Stiglitz. However it remains to be seen whether anyone will actually like more tax to really reduce inequality and boost growth... I think it is not likely and populism will get worse...

[Prithvi Shams · Rating 4 out of 5]

A cogent critique of IMF's unhealthy obsession with pushing down inflation at any expense to debtor countries and the hypocrisy of developed countries in preaching free market fundamentalism to the developing world while keeping their own doors closed. The author emphasizes on initiating and ensuring democratic discoursing in international institutions, calling for an end to behind-the-doors decision-making that has been the norm so far. The case is driven home by delineation of the economic crises that followed from IMF policies in East Asia, Russia and Latin America.

However, I've felt the author has been unduly kind towards IMF. He himself describes how IMF intervenes way too much in the capital market even though it is self-professedly a firm believer in the self-sustaining rationality of the market, and he comments that the only way to explain this dissonance is to regard the IMF as having the interests of Wall Street in its agenda. Yet, he himself treats the IMF as though it sincerely believes its prescriptions are in the best interests of its clients in the developing world, and its persistent denialism in the face of its unremitting failures is merely its foolhardiness. IMF doesn't deserve this benefit of doubt, this book is testament to that. Perhaps, a World Bank bureaucrat can only be so acerbic towards his colleagues!

[Vlad Sipos · Rating 4 out of 5]

Globalization is inevitable. We are more inter-connected than we've ever been.

Stiglitz's book analyses the winners and losers of the phenomena. The former are corporations that benefit from cheap labour and tax havens. The latter are unskilled workers who lose their jobs to immigrants and workers in developed countries, who see their jobs outsourced to countries with cheap labour.

Yet recently, the phenomena has seen disruptions because of the american far-right president, Donald Trump. He has embraced protectionist policies, which have made everyone worse-off, and always will.

Witty explanations and logical reasoning from an expert in the subject; if you want to see where the World is headed from an economical perspective, this one is a must-read.

[Adriaan Jansen · Rating 4 out of 5]

Stiglitz probably didn't make many friends inside the International Monetary Fund (IMF) when this book was published in 2002: ''Globalization and its discontents'' at times seems like a long criticism of the IMF. No, let me rephrase that: This book is actually a character assassination of the IMF and the policies it implemented during the 1980s and 90s.

This book focuses on 2 episodes in the 1990's: the East Asia crisis of 1997-1998 and the transition from communism to market economy in Russia after the collapse of the Soviet Union in 1991. In both cases, Stiglitz argues that the IMF, and other financial and economic institutions like the World Bank and the U.S. Treasury department, used incorrect policies that resulted in suboptimal results. During these events, Stiglitz worked as an economic adviser to president Clinton and as a senior vice-president of the World Bank, which, in a way, makes him an eye witness to how the IMF policies were designed and implemented.

Besides the criticism on how the IMF handled these 2 events (to which I will turn in a minute), Stiglitz is not impressed with how the IMF in general operates. He sees the IMF as an organization stuck in a dogmatic free-market ideology, which disdains the role of the government in the economy. Also, he feels the IMF is too much, if not exclusively, focused on inflation, and gives little attention to other important economic indicators such as growth and employment.

Equally problematic is that the IMF has little, or, according to Stiglitz, no room for discussion and debate. The free-market solutions the IMF imposes on countries who seek its help tend to be ''on size fits all'', and often don't take into account the particular circumstances of the particular country. Besides little debate inside the IMF, he also notices little curiosity towards new solutions and ideas.

Stiglitz favours a more mixed economy, where the market and the government have both important roles to play: The market to make sure resources are allocated in the best possible way, the government to make sure that the markets work and to prevent undesired side-effects of a completely unregulated free market.

In the East Asia crisis of 1997-1998, the IMF prescribed the ''Washington Consensus'', a mix of policies that include a balanced budget, low inflation (achieved through increasing interest rates), liberalization of both commercial and financial markets and privatization.

The Washington consensus prescriptions were originally designed to fight various crises in Latin America in the 1980s. In Latin America, many countries had governments that excelled in prolific spending, resulting in massive debts and budget deficits and horrific inflation. In theory, the prescriptions made sense, in practise they turned the 1980s into a lost decade for almost all countries where the Washington consensus was applied. Part of the problem of implementation was sequencing, doing some things in the wrong order, and doing others too fast.

In East Asia in 1997, the nature of the crises was different from those in Latin America a decade earlier. East Asian countries such as Thailand, Korea and Malaysia had high saving rates (which had allowed them to self-finance their incredible growth until 1997), budget surpluses and low inflation. Applying the one-size-fits-all prescriptions of the Washington consensus, mostly designed to fight inflation in Latin America, to East Asian economies as a condition for financial help from the IMF seems to have been the wrong decision.

What made this obligation for the East Asia countries to accept the Washington consensus if they wished to receive the IMF money bail-outs extra ironic was the fact that, according to Stiglitz, the IMF was (partly) responsible for the crises. The IMF had insisted that many East Asian countries open up their financial markets. Many of those countries were reluctant to liberalize their capital markets, but ended up doing so anyway. Hot investor money flowed in, fomenting local bubbles (such as a real estate bubble in Thailand), and at the first sight of trouble, the hot money flowed out again, leaving destruction and crisis in its wake.

Stiglitz argues that instead of forcing the Washington consensus on the East Asian countries, the IMF should have chosen a more Keynesian approach and helped those countries in expanding government spending to offset the fall in demand in the market.
Again, ironically, this is what the IMF was originally created for, but somehow, during the late 1970s and early 1980s, free-market fundamentalists had taken hold of the IMF, and they saw stimulus and deficit spending as undesired government interferences in the free market.

Summarizing: The IMF had not only provoked the East Asia crisis, but then also proceeded to prescribe the incorrect policies to solve, or at least alleviate, the crisis. The result was a IMF-facilitated crisis that was longer and worse than necessary.

With the transition from communism to a market economy, the IMF c.s. again made several mistakes, which again can be explained by its dogmatic free-market fundamentalism. Here Stiglitz objections to IMF policy have mostly to do with the order and timing of the policies. Basically, he thinks steps towards market economy were taken too fast. To underline his point, Stiglitz compares the communism-to-market-economy process of China and Russia, and concludes that China's slow approach has shown better results: China was poorer that Russia at the start of the decade and much richer at the end of it.

In Russia in the early 1990s, IMF recommended a quick move toward a market economy, and especially stressed the importance of rapid privatization. Stiglitz thinks that this rapid privatization was a bad idea, and that basic economic and financial infrastructure and institutions should have been put in place first (E.g. First create anti-trust laws, establish the rule of law and especially the respect for private property and then start with privatization).

The result of the rapid privatization, as favoured by the IMF, was that government monopolies became private monopolies, which were more inclined to abuse their monopoly position. Making matters worse, the Russian government usually received very little, almost giving massive state assets away for free to friends. On top of that, since property rights were not yet well established, and because many of the new owners realized that future governments might reverse these privatizations, the new owners proceeded take as much money as they could squeeze out of the newly privatized companies abroad. Crony capitalism galore. Benefits for the average Russian citizen: Almost none.

Then, in 1998, when the global impact of the East Asia crisis reached Russia, the IMF made again mistakes in Russia, when it decided to prop up the Russian rouble. In order to do so, the IMF lent billions of dollars to Russia, which only delayed the reckoning, allowing rich Russians to place their money in save havens, and burdened the country with unnecessary additional debt.

Why was the transition successful in China and not in Russia? Stiglitz points to 2 factors: Slow vs fast implementation and local design vs foreign (IMF) recommendations.

In the last parts of the book, Stiglitz makes some grave accusations when he implies that the IMF champions the special interest of the financial community. He may be on to something, but at the same time, here he is on the slippery slope towards the realm of conspiracy theories (something he said in the beginning book he would not do).

It was especially interesting to read this book in 2015, in the aftermath of the 2008 financial crisis. The great debate of austerity versus stimulus for growth is still being held in Europe today.

Especially relevant today is what Stiglitz has to say about moral hazard. Lenders in first-world countries can safely lend to countries and companies in the developing world because they know that in times of crises, the IMF will bail them out. This happened in the East Asia crisis: Western banks lent to Asian companies. Those companies entered hard times when the crises broke out. IMF lent money to the governments, so that they could pay back the western lenders. Many of those companies went bankrupt anyway, leaving the countries with massive debts and the western lenders almost completely compensated.

This is not very different from what happened in Greece in the last couple of years: Banks that had lent money to Greece were almost completely paid back by the bailouts Greece received. Relatively little money of those bailouts actually reached ordinary Greeks. See also ''Greek debt and a default of statesmanship'', Martin Wolf, Financial Times, 27/01/2015.

Stiglitz argues that one part of the solution is improving bankruptcy rules. If a company goes bankrupt, its creditor loses its money. Perhaps that creditor should have done better due-diligence and taken less risk? That is capitalism, after all. What is not part of capitalism is lending money to risky clients knowing that you will be bailed out if things go wrong.

[Mauricio Martínez · Rating 3 out of 5]

Joseph Stiglitz es un economista, ganador del premio Nobel en Economía en 2001, trabajo como asesor de Clinton y luego en el banco mundial como vicepresidente, hasta que fue despedido, por dejar clara su critica hacia la forma en la que tanto el Banco Mundial como el FMI operan.
Su obra es bastante vasta, pero uno de sus libros de divulgación mas conocidos es “El Malestar en la Globalización” (Globalization and Its Discontents (2002)) el cual trata sobre la forma en la que el FMI manejó la crisis de Asia del Este a finales de los 90’s y el pasaje de Rusia de su economía centralizada, a la economía de mercados, principalmente centrándose en cual es el supuesto propósito de la existencia del FMI, el motivo por el cual fue creada la institución, y los motivos que sus políticas parecen apoyar en la actualidad (ya que en las voces de sus ideólogos, la misión sigue siendo la misma, pero en el análisis material de sus acciones, se nota que están lejos de buscar la estabilidad económica mundial).
Hacer una reseña de libros de este estilo requiere bastante mas conocimiento del tema en cuestión de lo que yo puedo tener, lo mío no es un interés puramente académico, en el sentido mas tradicional de la palabra, sino más bien un interés personal en comprender el mundo en el que vivimos, visto desde diferentes perspectivas. Y una de esas formas es ver la visión critica de alguien que apoya cierta ideología (o sea, alguien abiertamente pro-capitalista), que critica las decisiones de instituciones que en teoría apoyan la misma ideología de fondo, lo cual nos permite entender algo más allá de la crítica ideológica que podamos hacerle a una institución tan nefasta como el FMI, sino que más bien, nos permite entender como incluso bajo la lógica capitalista, sus acciones fueron siempre incorrectas ya que no existía un apoyo teórico para ninguna de sus decisiones, sino mas bien un fervor cuasi religioso por la liberalización de los mercados a toda costa, sin importar las consecuencias.
Stiglitz toca bastantes temas de forma directa, ya que como alguien que trabajo muy cerca del poder durante muchos años, tuvo la posibilidad de ver y entender como se opera en esas esferas, como esas reuniones secretas se desarrollaban, como los países a los que se decía ayudar no tenían ni voz ni voto en la toma de decisiones que se supone iba a sacarlos de la crisis, de cierta forma, es un libro que te hace entender, junto a Shock Doctrine de Naomi Klein, la forma en la que las corporaciones financieras operan. Las oportunidades de generar ganancias siempre se encuentran en el caos, en ese momento en el que es difícil poder comprender cual va a ser el outcome de una situación, ahí es cuando el ámbito financiero entra en juego, siempre que exista una presión que genere un choque en una economía, una crisis, ahí es donde las oportunidades de generar riquezas se encuentran, y así es como estos sistemas operan, por mas que la forma en la que estos se definan sea la diametralmente opuesta.
Una de las cosas más interesantes del libro, es cuando empieza a hablar sobre cómo se dio el pasaje de Rusia a una economía de mercados, como se regalaron y liquidaron empresas estatales de forma criminal entre los amigos cercanos a Boris Yeltsin convirtiendo a estos “empresarios” en multi millonarios de un día al otro, sin generar nada nuevo, sin haber creado algo, simplemente descuartizando la economía Rusa y usando esos rescates del FMI para poder cristalizar esto en dinero palpable, que luego pudieron sacar del país y depositarlo en paraísos fiscales, sumiendo al país en la pobreza (aunque para los ideólogos del FMI, la presencia de tiendas francesas en las calles de Moscú señalaba lo opuesto, como si la existencia de un mercado para los ultra ricos hiciera desaparecer la creciente pobreza del país, que creció de forma exponencial con la caída del régimen soviético).
Un libro que no me introdujo ninguna idea necesariamente nueva en la cabeza, ya que mucho de lo que habla lo viví, lo entiendo a un nivel emocional por haber experimentado esos cambios en el mundo durante mi temprana adolescencia, pero que me permitió, al menos de forma basal, comprender porque pasó lo que pasó, porque las políticas implementados fallaron y siempre iban a fallar, porque el razonamiento, o mejor dicho, la excusa que se puso para ponerlas a prueba Era un razonamiento errado, basado en el desconocimiento de como realmente funciona la economía, de parte de operadores políticos con un conocimiento rudimental de los temas que deberían de dominar, esgrimiendo argumentos sacados de libros de texto, sin el matiz que otorga la realidad misma, que debe de estudiarse en conversación con ese conocimiento teórico, y no de forma impuesta.

[David Sarkies · Rating 3 out of 5]

A rant from the President of the World Bank
27 October 2012

I guess I picked this up thinking that it would be interesting to see what a former president of the World Bank had to say about the globalisation debate. It was an interesting read but I sometimes wonder the extent of the appeal that this book would have since it is written by the former president of the World Bank. For instance if I were to hand this book to a left leaning person they would dismiss it out of hand because it was written by the former president of the world bank (let's see how many times I can say that), while when I showed it to a guy that was so far to the right, he made Ronald Reagan look like a left wing radical, he scoffed at it and said 'Stiglitz, he's a lefty'.

I did find this book interesting, though it seemed to be very much in the vein of 'well, the World Bank was set up to eliminate poverty, and it would have worked if not for the IMF'. Seriously, do you expect me to believe that? Why do you think I include the World Bank among the unholy trinity (of the WTO, the IMF, and the World Bank). Well, it is suggested that the World Bank is generally headed up by Europeans, but then again Margaret Thatcher and Nicolas Sarkozy are also Europeans (though I get the feeling that Britain does not really like to consider itself as European, probably because they are special since they speak English).

The problem with rising to the top and attempting to implement change is that when you get up there you suddenly discover that there are all of these competing interests that you must consider when making such decisions. It would be all well and good to take all of the wealth off of the billionaires and give it to the poor, but if all the poor do is go and spend it, and live it up, you will discover that in the end they won't have been lifted out of poverty.

Anyway I have noticed that with some poor people, though not all of them. There are people on the pension that are quite frugal to the point that they are able to afford an overseas holiday. However, on the other, hand I have seen (and been one myself) where the first thing that you do when you get your pension cheque is to take it all out of the bank, and spend it all. It is one of the reasons I prefer to keep money in the bank because if I take it out I spend it.

In a way trying to solve all of the world's problems can be daunting in and of itself, but we must remember that this is a fallen world and that we will never live in a perfect world this side of the restoration of all things. However, it does not mean that we cannot go out and attempt to make it a better place. People have done that in the past. Remember that we now have universal health care (for what it is worth), free education (for what it is worth), safe streets, and welfare because people in the past have campaigned for it. William Wilberforce brought an end to slavery and Martin Luther broke the power of the Catholic Church. Change is possible, and moving away from the ideas that are binding and destroying our society is also possible.

The problem, as is outlined in this book, is that we are stuck with a mindset that simply does not work. In the same way that wars are fought by generals who have no idea of what it is like in the trenches, economic policy is developed in universities where people have no concept of what it is like to struggle in a capitalistic society. Our politicians live lives of luxury, and the corporate bosses are stuck in their walled enclosures not understanding what it is like to be an employee struggling with everything that seeks to squeeze money from you. You may be on a million dollars a year, but when somebody is earning only 1% of that, and having to pay for essentials that you simply don't even think about then there is a problem. You may be a nice guy, but if you don't understand the plight of the middle class, and you don't understand how somebody can support a family on $50000.00 then you have lost touch. You are no better than the aristocracy of old.

However we can't simply say that it is too hard and nothing can be done because Martin Luther broke the back of the Catholic Church, and William Wilberforce brought and end to slavery in England. These were two things that at the time seemed impossible. The factory workers of 19th century England could only dream of a day when they would receive fair wages and a safe workplace, and people in the Third World still dream of that possibility. We have that, but even then it is slowly being taken away. The introduction of the private health care rebate is creating a system where some can afford health care and others cannot. The same with fees for enducation, since everytime we raise fees we cut funding. We may still have subsidised education where as Bagladesh does not, but we are slowly moving in that direction.

I have probably said much about that before, however I want to talk about one of the assumptions that seems to be permeating about: the Efficient Market Theory. The idea is that because the market is made up of many small people then as a collective they act in an reasonable manner, while individually they may not. The idea is that the market is always at a point of perfection due to a belief in mass psychology. However that is rubbish on two counts. Simply because we are talking about mass psychology does not mean that the mass behaves in a reasonable manner. Take the French Revolution for instance. That was a mass rebellion against the established order, and they did not act in a reasonable manner. In fact all hell broke loose. Taking this idea over to the markets has the same effect. Bad news tends to create mass hysteria meaning that a company, or the broad based market, will loose a lot more than what it should. Usually, in relation to the market, this happens after a period of mass euphoria, where the mass believes that nothing can go wrong and the market will always go up.

However the idea that the market is made up of a mass of individuals is also a myth. While to an extent our savings are exposed to the market, this is generally through a series of proxies, namely the banks and the superfunds. As it turns out the collective of retail shareholders (shareholders who have a direct exposure to the market through individual shareholdings) is quite small. The bulk of the market is actually owned by a handful of individuals in the form of a company. While a company, such as AMP (a large Australian Superfund) may have a number of fund managers, it is not so much the individual manager that holds the shares but the company as a whole. Also, while we may have our super in a specific fund, we generally do not know the actual make up of that fund (is it shares, and if so, what shares does it hold?). As such, the idea of the Efficient Market is a myth, because there is no mass psychology, but rather a small group of individuals that invest money on behalf of the masses.

[Tuncer Şengöz · Rating 3 out of 5]

İlk basımı 2002 yılında yapılan kitabın genişletilmiş baskısının önemli bir kısmını 2000 öncesi Asya ve Rusya Krizleri, IMF politikalarının eleştirisi oluşturuyor. Özellikle Rusya ile ilgili bölümler ilgi çekici. Küreselleşmenin 2000'lerin başında nasıl görüldüğünü değerlendirmek bakımından ilginç olsa da, daha sonraki dönemde yaşananlar (2008-09 krizi, Arap Baharı, Avrupa borç krizi, Brexit, Trump, Latin Amerika'da yeniden darbelerle meşru yönetimlerin düşürülmesi, vs.) kitabın genişletilmiş yeni baskısında yer almadığı için, kitap güncelliğini önemli ölçüde kaybetmiş durumda.

[David McGill-Soriano · Rating 2 out of 5]

It is very dull. Almost feels as a history book. Some insightful information regarding the IMF, but it is catered to people who know these topics.

[Gabriel Leonard · Rating 4 out of 5]

I only actually made it 2/3 of the way through. I got bored of the writing style tbh. But stiglitz’ take on the IMF/WB is extremely interesting and should be at least required ~skimming~ for anyone interested in development (but don’t get too interested, RIP USAID)

[Lucía Vijil Saybe · Rating 5 out of 5]

Lo fundamentalistas de la economía dirán que la expansión del capital, la privatización y la liberalización del mercado mundial son las respuestas a los desequilibrios del mercado (sin intervención del estado). La globalización no es mala, porque es necesario el avance en políticas de cambios sustentables en una sociedad, Stiglitz el economista más humanista de las dos últimas década, clarificando con ejemplos que las crisis actuales y el empobrecimiento en crecimiento es gracias a los guardianes internacionales de la finanzas: el FMI y el BM. La agenda económica mundial, gira en torno a las grandes corporaciones e inversionistas de "alto calibre", cualquier intento por dignificar la labor humana y recompensarla.. ha sido totalmente destruida por un proceso intensivo de esclavitud moderna, llamada globalismo.

[Jared Donis · Rating 5 out of 5]

The good professor has done a remarkable job here. I enjoyed going through the engaging chapters. However, it’s all about the IMF, IMF, IMF! It might as well be titled “How the IMF Screwed Up and What to Do About It” I don’t think these financial institutions alone could represent the concepts, complexity and dynamics involved in globalization. I hope he gets to publish a revised edition. Overall, well done.

[Sukanta Kumar Hazra · Rating 3 out of 5]

Quite a detailed attack on the policies and failures of IMF and World Bank. Found the presentation a bit draggy. Overall good read if you want to get a perspective on the working of these two institutions that have such a great impact on the lives of people in the developing world. Sometimes I wonder how little I know of how the world really works; such books help to illuminate that darkness.

[Nargesss · Rating 3 out of 5]

من این کتاب رو حدودا 5 سال پیش خوندم تا اونجایی که خاطرم هست دیدِ خیلی خوبی سبت به پدیده ی جهانی شدن بهم داد اون زمان اما امروز که سرفصل هاش رو مرور می کردم به نظرم اومد کتاب خوبی بوده واسه سال های خودش و خیلی واسه مفهوم جهانی شدن به معنای امروزش جامع نیست مسلما