Joseph E. Stiglitz’s book Globalization and Its Discontents disputes traditional ideas in global economic and trade policy. Written by a leading expert and head of the World Bank’s economics department, the book provides valuable experience and knowledge about the impact of globalization on developing countries. Globalization is generally applauded for bringing about economic prosperity, technology advances, and unity among countries, but Stiglitz brings attention to its negative effects whenever the IMF, World Bank, and WTO are in charge. According to him, often these institutions create rules that end up doing greater damage to weak economies rather than helping them.
The author focuses on the gap between globalization and how it has been dealt with. He believes that globalization has the potential to promote economic progress, new inventions, and development. However, he criticizes the idea of what is called the “Washington Consensus,” which suggests that reducing regulation, introducing liberalization, and tightening austerity are necessary measures endorsed by IFIs. Stiglitz states that the current policy applies to all countries, neglecting the differences in society, economy, and politics between countries.
His experience with the World Bank gives his critique much more value. He recognized that, because the IMF was influenced by the United States and top Western thinkers, its policies were often enforced in developing countries without considering how they could work there. As a result of these policies, there were regular crashes in the economy, an increase in people out of work, more civil disturbances, and a greater difference in wealth.
The author uses real-life examples to make his arguments about the negatives of wrong and hasty economic strategies. He informs the reader about how IMF policies destroyed the economies of Argentina, Russia, and several East Asian economies during the 1997 Asian Financial Crisis.
Recent changes in Russia include the IMF’s support for an immediate shift from a planned system to one that relies on markets, known as shock therapy. This meant prices were allowed to rise quickly, state companies were privatized, and the government reduced its spending. As a result, people faced hyperinflation, the GDP tumbled significantly, and some individuals gained enormous control over the economy. Stiglitz points out that the IMF focused only on liberalization and ignored developing important institutions like laws, how firms are managed, and regulations.
In comparison, Malaysia decided against following the IMF’s advice and implemented capital controls to prioritize peace in its society when the crisis hit. Because of this, Malaysia soon recovered from the crisis more successfully. The cases here prove that we can choose alternative methods, and they could be better than the usual approaches.
The author is especially critical of IFIs, with particular focus on the IMF. He mentions that these businesses tend to rely more on beliefs than on facts. Unlike the other organizations, the IMF is accused of using harsh market-based policies without giving much thought to the social or political results. According to the author, their behaviors are not clear, and they cannot be held accountable. The policies that shape the global economy mainly affect developing countries, since they are underrepresented in the organizations that establish them.
According to the author, these institutions lack respect for ethical values. He indicates that while they claim to care about all nations, powerful nations and corporations are usually who they work for. He argues that the frequent exchange between Wall Street and government officials favors private interests over trying to fight poverty and encourage equality.
Globalization and Its Discontents explores in detail the impact of poorly executed globalization on people. Stiglitz pays as much attention to people affected by bad economic policies as he does to GDP and economic indicators. It is typical for educational, health, and public services to be reduced during austerity. Freedom in trade may make local businesses collapse before they have gained a competitive advantage. Privatizing companies quickly may lead to people losing their jobs and the nation losing control of major sectors.
Consequently, many people feel disgruntled and stand against globalization, something Stiglitz believes is justified. The subject also shows why, even in developed countries, there is growing opposition to globalization, like what used to occur mainly in poorer countries. The resistance is directed toward how globalization has been run, helping a limited number of people instead of the majority.
He manages to present challenging theories and institutions in a plain and interesting manner. He leaves out complicated terms and expressions, so the book is useful to anyone interested and valuable for professionals and students. His logic is strong, he writes persuasively, and his views tend to be passionate. Todd mixes the use of evidence and research with describing the people, which makes his writing interesting and meaningful.
While the book is bold and clear, Stiglitz was not gentle enough when it came to the IMF, and his alternative suggestions sounded too optimistic. He did not give enough importance to the issues involved in the governance of those nations. Another problem is that while Stiglitz has a clear picture of what is wrong with globalization, his answers are not detailed and do not specify how they should be carried out. While his suggestions to change major global organizations and make decisions more democratic seem inspiring, it is difficult to see how they will be carried out.
Though Globalization and Its Discontents was published in 2002, its relevance is still high today. The problems in the economic system, Stiglitz viewed as the crisis in 2008, the rise of populism, greater inequality, and the COVID-19 challenges, were revealed due to these matters. His plea for gentler, clearer, and fairer world economic unification cannot wait any longer. Anyone interested in challenging global capitalism and development policy can still rely on the book to guide their thinking.
