Review on the book
‘Globalization And Its Discontents’
Written by Joseph Stiglitz
The Famous book ‘Globalization and its discontents’ by Noble Prize Winner Joseph Stiglitz reflects the shortcomings of globalization especially affecting the poor and the developing countries. It is mainly focused on the failed policies dictated by the international institution, the International Monetary Fund (IMF).
The first two chapters reflect the author’s experience of joining the World Bank and describing the functions of the IMF, World Bank and WTO and how they failed to acquire those, especially the IMF.
The book is very interesting especially for understanding the repercussions of globalizations. The authors tone and remarks towards the IMF at times are quite hostile; some comments were rather repetitive and advocated for China more than enough. But overall it is an influential book leaving questions among the readers’ minds regarding the policies and intentions of the West.
Freedom to choose? (Chapter3)
Privatization, trade liberalization and fiscal austerity were of prime necessity advocated by the Washington Consensus. IMF’s formula to a prosperous economy is rapid privatization, trade and financial market liberalization. At a first glance, it may seem like Stiglitz is completely against such a formula but he did mention with a lighter view that privatization and trade liberalization can bring efficiency but when it is done in the right manner. Such policies should not be the ends rather than the means to a sustainable growth as other policies or external factors should be there as pre-requisites or else it would lead to further increase of poverty, inequality and misuse of assets for the developing countries (Stiglitz, 2002, p. 53).
The book does not favor the public sector, as government of some countries do engage in unnecessary activities which are left better with the private sector and hence comes the argument for privatization. But the way IMF approaches makes a great deal of difference. The IMF and the World Bank approaches from a narrow perspective of rapid privatization without thinking about the other institutional factors like social security systems, unemployment and disability system etc. which are important for the transition and I could not agree more with the author regarding this issue.
Developed countries like United States have institutions like Federal National Mortgage Association for the private sector not performing well for low and middle class families; hence for developing countries where the extent of poor is much more, this problem would be much severe. Foreign owners will be more ruthless in firing workers leading to more unemployment but such dualism can exist within the periphery and the domestic owners or the public sector would also work for their own vested interest, not the workers which Stiglitz ignored.
Recommendation includes lower interest rates to create jobs, proper timing and sequencing, more or less checking corruption and avoiding asset stripping to get comprehensive program for privatization. But it is necessary to notice that lower interest rates may cause other problems like lower investment and excess real money demand causing inflationary problem.
Stiglitz pointed out how the IMF or can be said Washington advocates for the liberalization of the trade, financial markets and the capital markets of the developing countries. There exists double standard when such policies are forced upon the developing countries when the developed countries themselves opened up slowly and systematically during their course of development. It true that trade liberalization is supposed to benefit a country for the exchange of resources and utilizing comparative advantages. But it is easier said than done, as it needs other institutional factors complementing it and should be done carefully and systematically which...
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