Just Finished Reading: Globalization and its Discontents by Joseph Stiglitz (FP: 2002)

If there was still any doubt that the process of Globalisation was in trouble it became starkly clear during the Battle of Seattle. Opposition to the seemingly inexorable progress of globalisation – seen by many in the West as an unqualified good – had been growing (inexplicably according to some) for years. Here is was, naked before the world’s cameras, for all to see. But why was such a thing even possible never mind so deep and so widespread? Didn’t the underdeveloped world want to join in the world’s economy to drive wealth generation, along with technological and cultural progress?
Of course the reality of globalisation on the ground hardly ever met the expectations of so many economists and others in the lofty offices inside the World Bank, the International Monetary Fund and along Wall Street. The IMF in particular seemed wedded, indeed welded, to what became known as the ‘Washington Consensus’ which included fiscal policy discipline (dealing with deficits), redirection of public spending from any subsidies, market determined interest rates, liberalisation of trade, foreign investment and money markets and radical deregulation to free up market forces. In other words moving, as quickly as possible, from the original economic conditions on ‘first contact’ to as free a market situation as possible. It was very much a one size fits all model and was fully aware of the pain it caused (in the short term) to produce a vibrant western style economy with all the benefits that go with it.

Unfortunately, time and again, in South East Asia, South America and, most obviously, in Russia the application of the Washington Consensus often produced the exact opposite of what was intended with hikes in interest rates, destruction of local businesses, asset stripping by foreign short-term investors, widespread, deep and lasting unemployment, political upheaval and, almost as a side effect a few people becoming increasingly very rich whilst many were pushed ever deeper into lasting poverty. Looked at cynically it almost looked like that was the intention and that the beneficiaries where those lucky enough to be friends of the west in the guise of smart Wall Street investment banks. But this is not an outsider’s story. The author, a Nobel Prize winning economist, was at the heart of things as an advisor to President Clinton and as Chief Economist at the World Bank. This is VERY much an insider’s story.

Much of the book is dedicated to a criticism of the IMF (although the US Treasury and even the World Bank itself comes in for criticism too) which did, at times, become a bit wearing. The author writes well and certainly gets his points across but the impression is definitely of axe grinding with little love lost between him and the IMF in particular. However, even with that taken into consideration (I’m pretty convinced that this almost personal aspect of the book made me DNF it the first time when I tried to read it over a decade ago) this is still an interesting insight into the very top levels of economic planning on a global scale. To get a full appreciation though I’ll need to read more about the subject – both economics and globalisation – in future. Fortunately economics has become a recent topic of interest for me and I have about another 10 books on the subject yet to be read. So much more to come! A reasonable (very) high level view of later 20th century global economics.