Globalization and its discontents

Abstract

So, do we abandon economic globalization? Stiglitz notes that it is not helping the world's poor or the environment -- "poverty has soared as incomes have plummeted" (p. 214) -- and he understands the anger of people against the international agencies. But, at the same time, he argues that globalization has brought many benefits, not least the amazing economic growth of the East Asian region, and so to abandon it is neither feasible nor desirable. But globalization needs to be given a human face, to demonstrate a focus on the social consequences of economic policies, to be more open and transparent, and to recognize that there is not just one (US) market model. On this score, Stiglitz actually offers a series of detailed prescriptions for reform of the governance and policies of the international economic agencies which are too detailed to outline here. These prescriptions make sense to me, although a distinguished IMF economist has referred to them as "at best, highly controversial, at worst, snake oil."(1) Stiglitz is controversial, no doubt, and not least for criticizing named officials, some of whom he must have known well. But my only criticism, based on a historical study of international debt crisis management, is that he never mentions the lengthy history of western financial management of "lesser" nations. Yet, in 1904, Theodore Roosevelt formulated a Corollary to the Munroe doctrine aimed at Latin America, noting that "if a nation shows that it knows how to act with decency in industrial and political matters, if it keeps order and pays its obligations, it need not fear inference from the United States," but then went on to argue that brutal wrongdoing or impotence [read financial impotence] could require US intervention.(2) This Corollary was praised by foreign investors in both the US and Europe, and has powerful parallels with the blame which Stiglitz suggests that the IMF unfairly turned on East Asian countries for their "rotten" institutions and corrupt governments during the East Asian crisis. Likewise, American"dollar diplomacy" between 1900 and 1930, outlined in Emily Rosenberg's recent book, had powerful elements of financial imperialism aimed, not least, at Latin America.(3) With such a long history of financial intervention, no wonder Stiglitz has become something of a sainted guru south of the US border.