A Review of Globalization and Its Discontents, by Joseph E. Stiglitz: an Impairment of International Institutions’ Impartiality

Topics: Economics, World Bank, International Monetary Fund Pages: 6 (2036 words) Published: October 28, 2012
One of the most pressing economic problems of our time is the objectionable direction taken by the leading regulating institutions, such as the International Monetary Fund or the World Bank. This issue is addressed in Globalization and Its Discontents, and is thoroughly analyzed throughout the next pages. It was written by Joseph E. Stiglitz, (born February 9, 1943), an American economist and author. He is also the former Senior Vice President and Chief Economist of the World Bank. He is known for his critical view of the modern management of globalization, free-market economists and some international institutions like the International Monetary Fund and the World Bank. He was born in Gary, Indiana and received his PHD from MIT in 1967, became a full professor at Yale in 1970. Since then, he has taught at Princeton, Stanford, MIT and Oxford. In 2001, he was awarded the Nobel Prize in Economics. In October 2008, he was asked by the President of the UN General Assembly to chair a commission and draft a report on the reasons for and solutions to the 2007-2008 financial crisis, producing, in response, the famous «Stiglitz Report». He is currently a Professor at Columbia University. His research and technique gained him recognition, making him one of the most frequently cited and influent economists. His most famous contributions include the «Screening technique» which is a method used by one economic agent to extract private information from another (this research was carried on with George A. Akerlof and A. Michael) and the Efficiency Wages («Shapiro-Stiglitz model) which explains the unemployment in equilibrium and why wages are not bid down by job seekers. Stiglitz founded one of the leading economics journals - “The Journal of Economic Perspectives” and some of his most famous publications include:

- 1998, Redefining the Role of the State (10th Anniversary, MITI Research Institute) - 2002, Globalization and Its Discontents - - - 2008, The Three Trillion Dollar War ; with Linda Bilmes - 2010, Freefall: America, Free Markets, and the Sinking of the World Economy

Globalization and Its Discontents was first published in 2002 by W.W. Norton. It has been described as a criticism of the actions of most of the international institutions, led by the International Monetary Fund (which would favour the interests of the United States, its «majority shareholder» over those of other developing countries). Going by Stiglitz’s experience as a member of (and advisor on) the US Council of Economics and the World Bank, this work highlights the failed measures implemented by the IMF on several cases such as the East Asia Crisis, the transition of former Soviet Union countries towards market economy or the liquidity problems met by developing countries, where the organization’s actions produced harmful effects on these economic situations. According to Stiglitz, the measures worsened economic depression and triggered social crisis. This result can be explained by the domination of an ideology based on the Washington consensus within the institution. This set of economic policies relies on the market infallibility and a complete confidence in the IMF’s actions. Its persistence would result from the initiatives and the doings of developed countries’ governments, among which the USA’s one and its Department of the Treasury (in charge of the relations between the IMF and the US administration). Indeed, the Washington-based institution would in fact be under the influence of the member countries with the highest political stature on the basis of the number of votes held by each of them. Therefore, rich countries and the USA in particular would hold the reins of the institution, disregarding the principle of fairness....
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