Topics: Economics, World Bank, Free market Pages: 10 (3564 words) Published: April 30, 2013
Journal of Libertarian Studies Volume 18, no. 1 (Winter 2004), pp. 89–98 ©2004 Ludwig von Mises Institute

Edited by N. Stephan Kinsella*

JOSEPH E. STIGLITZ. GLOBALIZATION AND ITS DISCONTENTS. NEW YORK: W.W. NORTON, 2002. PP. xxii + 282. Globalization and its Discontents is an enjoyable and thoughtprovoking book. It is probably the most readable, well-argued, and subtle attack against globalization in the past few years. Although the author fights, in a rather dogmatic style with some shades of arrogance, against what he believes to be devious free-market attitudes, his prose is simple and accessible to a wide audience. But it is also deceptive. While the author emphasizes time and again that he is not leveling an attack against market principles and globalization in general, he advocates Keynesian policymaking (money printing and deficit spending) on virtually every page. It is an enjoyable book for the reader in search of the perfect world, and it suits the well-meaning anti-globalist who believes that since individuals make mistakes, it is wiser to give other individuals the right to interfere. Put differently, Stiglitz strongly believes that bad policymaking can be reduced by enlightened policymaking, both nationally and on a global scale. And that when international economic agencies do not behave properly, they must be reformed, made more transparent and accountable, and less dependent on special interests. The author believes that national leaders, by and large, pursue the well-being of their peoples. He also believes that international agencies, like the IMF and the World Bank, must ensure that global phenomena maintain a “human face,” and that national politicians be supported by somebody in charge when something goes wrong. Indeed, it is hard to see much economics in these conclusions (see in particular the final General Counsel, Applied Optoelectronics, Inc. To submit reviews for this section, visit *


Journal of Libertarian Studies 18, no. 1 (Winter 2004) chapter of the book). Some readers might also question its logic. As the following pages will explain, these doubts are justified. The foreword to the book sets the pace. While taking good care to inform the possibly unaware reader about his fundamental contributions to economic science, Professor Stiglitz, the 2001 Nobel Laureate, reveals that he became interested in real-world matters in 1993 when he joined the Clinton administration. He later continued his career at the World Bank where he was chief economist and senior vice president. The author claims that this book is the result of those eye-opening experiences, during which he found out that decision-making processes are often influenced by politics and ideology. He further realized that globalization without governance often leads to devastating results, especially on Less Developed Countries (LDCs). Surprisingly, however, the core argument of the book is not the analysis of the causal link between ideology, politics, and economic performance in a globalized world. Rather, the author keeps concentrating on bad policymaking carried out both by Western national governments and by international organizations. He posits a direct causal link between globalization and bad policymaking, and concludes by suggesting suitable rules for global economic management. According to Stiglitz, these rules should be fairness and consensus, and they should be designed through a democratic process so as to guarantee social justice and meet the needs of everybody. His thesis is not developed in a theoretically consistent framework. Instead, the author offers a list of case studies in bad economics and policymaking by the IMF and the U.S. Treasury. The next paragraphs will therefore reconsider the main issues raised by Stiglitz, highlight his most important arguments, and underscore some factual and methodological puzzles, these being in fact equivalent to...
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