Globalization and its discontent

Globalization and its discontents by Joseph Stiglitz

In his book, the former chief economist of the World Bank, Joseph Stiglitz, takes a very critical look at globalization. Based on his experience in the world economy, he tries to eradicate the wide-spread view that globalization only brang about positive things such as an improvement in the standard of living of people or the alleviation of poverty only to name a few. In his study, Stiglitz focuses on the failures of globalization and speaking of those introduces three world organizations , the World Bank, the IMF and the WTO, which he consideres as the driving forces behind the failures being committed.While hopes for development of third world countries were high, reality has turned out to be cruel and relentless. Contrary to all the promises of alleviating poverty and raising the standard of living in developing countries, globalization has actually caused the chasm between rich and poor to increase. Furthermore, the countries which indeed profit from open trade and free market policies are the rich and industrialized countries whereas poor countries have to suffer even more and burden the externalized costs produced by the West. Stiglitz believes that the World Bank, the IMF and the WTO’s policies hinder developing countries from building up a growing and healthy economy. Those institutions which were put in place to assist developing countries in that transition process do not act as representatives of their interests. Coupled with loans are usually extensive conditionalities which the borrowing country has to commit to in order to receive the loan. These loan conditionlaties tend to be very demanding and especially witnessed at the example of African countries such as Ethopia have proven to be devastating for the prevalence of democracy and local economic growth. On the other hand, they allowed for the enrichement of multinational corporations. The IMF’s response to economic development was the idea of a market economy, without the installment of institutions to ensure the protection of local businesses. The IMF urged developing countries to liberalize their local markets causing their economies to destabilize by massive inflows of short-term investment capital. Inflation followed causing dramatically rising interest rates. As a result widespread bankruptcies were on the agenda, followed by massive unemployment and the prompt withdrawal of foreign capital. Left alone to deal with the economic disaster, the countries also have to cope with social unrests, famines and contaminations due to infectious diseases.The author decries that the IMF and the World Bank’s policies are driven by rich countries’ greed and striving for profits which greatly exceed their social awareness of third world countries which are in need for development.On the other hand, Stiglitz gives examples of countries which successfully managed the transition from a developing to a growing economy. China and South Asia, nowadays the two greatest emerging markets, resisted IMF conditions and declined any of its money. The author views South Asia’s denial of aid from the IMF as key to a successful development.In spite of the fact that globalization has not kept many of its promises, Joseph Stiglitz believes that globalizaton can in fact bring about positive change and enrich everyone in the world, even the poor. Yet, he emphasizes that it is fundamental to rethink the approach and the ideas used to manage globalization. Therefore, it goes without saying that a change in the structure of the IMF, World Bank and WTO is unavoidable. In the past, these institutions have abused their exclusive rights and priviliges which had devastating consequences for many developing countries and the environment. Stiglitz argues for a reform of the IMF and the World Bank as they lack accountability and transparency. These obscure organizations made arguable decisions to overcome legal barriers which helped them to realize the idea of rapid market liberalization. Furthermore, the author demands the extension of voting rights to developing countries which are clearly underrepresented among the member countries. Given the present global situation marked by problems like overpopulation, pandemics and economic disasters, the need for equitable growth is more urgent now than ever. The methods and approaches taken to tackle these problems should be specific for every developing country. Change has to happen gradually and selective policies should be adopted which would meet and benefit an individual country’s needs. According to Stiglitz, it is even more important to promote the prevalence of democracy which he consideres the base for successful development. A strong political background is the solid fundament for a country’s aim to achieve economic growth and development.