Globalization is Mismanaged: A Critique of Stiglitzs Views on Globalization - Essay Example

? Globalisation is mismanaged: A critique of Stiglitz’s views on globalisation 17 February Globalisation is mismanaged: A critique of Stiglitz’s views on globalisation That globalisation has made the poor even poorer is a common argument from activists and anti-globalization organisations. Saying that is “normal” for them. When someone asserted that globalisation has been grossly mismanaged by developing countries and their global institutions, it would not have turned so many heads, until it came from the Chair of Bill Clinton’s Council of Economic Advisors (1993–97) and Vice President and Chief Economist at the World Bank (WB) (1997–99) and former International Monetary Fund (IMF) employee Joseph Stiglitz. Stiglitz, in his 2002 book “Globalization and its Discontents,” argues that globalisation can be a “force of good,” but it has to be “radically rethought” (Stiglitz, 2002: ix-x), particularly after being mismanaged by three global institutions, the World Trade Organization (WTO), the WB, and the IMF, that made globalization a deceitful tool for the advancement of developed countries. This paper critically assesses his views on globalization. It argues that Stiglitz provides compelling evidence that globalization has failed, because the main international institutions that were supposed to manage it failed as well; however, he neglects social, cultural and religious factors that are important in making globalization work and his suggestions are not entirely workable. For the WTO, WB, and IMF, globalisation works, because it has economically integrated countries and enabled the “free flow” of goods, services, information, and capital all over the world. On the one hand, Stiglitz agrees, because he provides an economic perspective when he defines globalisation as “the removal of barriers to free trade and the closer integration of national economies” (2002: ix). This definition is empty of any negative connotation, because it highlights how barriers are generally bad to free trade and that free trade is good for the economy. Stiglitz believe that free trade is good for poor economies, because it means that there will be a level playing field against developed countries and that they would have a fair fighting chance to sell their goods and services and to enhance the quality of living of their students (Stiglitz, 2002, 2007). He provides the examples of East Asian countries, which before the interventions from the IMF, were making globalisation work for them (Stiglitz, 2004: 203). They did this by exporting to other countries, closing the technological gap, and then ensuring that the fruits of globalisation were equitably distributed among their citizens (Stiglitz, 2004: 203). East Asian governments took an active role in managing the economy, which was far from the tenets of rapid liberalisation, privatisation, and deregulation of the IMF and WTO (Stiglitz, 2002, 2007). These governments managed the slow transition to deregulation and protected key industries. At the same time, they also provide safety nets for those who will be disadvantaged by free trade (Stiglitz, 2002, 2007). On the other hand, Stiglitz’s positive understanding of globalisation changed after serving the WB and the IMF. In an interview led by Stern (2006), Stiglitz remembers asserting to the WB that he will represent the interests of the developing countries and not the WB: “When I accepted the job, I said that I would do it only if I could be a spokesperson for the developing countries, not for the World Bank.” He believes that he took the job, because he would be free to express himself as an economist, and not as an advocate and public relations personnel of the WB. He underlines that his “effectiveness as a chief economist depended on people believing it was my analysis” (Stern, 2006). Within the organisation, however, Stiglitz gathers evidence that prove the contrary to the belief that the world is flat and that globalisation works. His analysis showed that when the IMF, the WB, and the WTO exerted their influence to rapidly change macroeconomic structures and policies, developing countries fared worse, because they lacked the political structures to monitor and manage the liberalising effects of globalisation (Stiglitz, 2002, 2007). He concludes from his economic analyses that globalisation is not working, not because it is inherently flawed (as some anti-globalisation would say), but because the political forces leading it are not making it work for the benefit of all. Stiglitz argues that globalisation has been mismanaged by the developed countries and the international organisations that they have been heading, because they focused on their self-interests alone, instead of genuinely helping the poor economies be released from the cycle of poverty. Stiglitz says that the problem is that “economic globalization has outpaced political globalization” (Kingsbury 2006: 28). He argues for the importance of the government in “tempering” globalisation. He stresses that globalisation has made societies more interdependent and require global actions to address national and international economic, political, and social issues, but the political structures needed to make globalisation work are not yet fully democratised (Yaiche 2010). The strengths of Stiglitz’s contributions to the debate of globalisation are: 1) his empirical analysis of the relationship between the mismanagement of globalisation and the ineffectiveness of globalisation in achieving desired economic, political, and social outcomes and 2) he comes from the viewpoint of an insider, which gives him “ethos” or authority on the subject. Despite criticising the “radical conclusions” of Stiglitz, Koechlin (2006) underscores the economic analysis of Stiglitz has some merit. Stiglitz uses his own criticism of textbook economic models when discussing globalization. As an economist, he uses an objective viewpoint in analysing the outcomes of IMF’s programs in several countries. He argues that short-term macroeconomic changes and gains do not efficiently translate to trickle-down impacts of globalisation (Stiglitz, 2002, 2007). It is better to have government controls that will realistically apply globalisation and make it work for their specific economic, social, and political needs (Stiglitz, 2002, 2007). Bulut et al. (2010) and Jones (2010) agree that Stiglitz’s analysis is compelling. For instance, Stiglitz showed that for some Asian countries, especially China, they have managed their conversion to more liberalized markets more successfully than the previous Soviet bloc economies and other developing countries, because the latter undertook quick and excruciating transitions to neoliberal capitalist economies in the 1990s and early years of 2000 (Bulut et al. 2010: 161). Stiglitz asserts that during the prime of the ‘Washington Consensus’ of the 1990s, the IMF and World Bank sponsored structural adjustment programs that compelled many nations to abolish important areas of regulation and social safety nets with terrible outcomes: The results were grim: poverty in the former Soviet bloc countries increased from 1987 (shortly before the beginning of transition) to 2001 by a factor of ten. The contrast between the claims of free market advocates, who predicted an unleashing of forces that would bring record prosperity, and the unprecedented increases in poverty that actually occurred could not have been greater. (Stiglitz 2007: 39). Stiglitz is able to identify that the IMF made serious errors in “development, crisis management, and in countries making the transition from communism to capitalism” (Stiglitz 2007: 39). These mistakes included obliging countries to pursue fast-track liberalisation, without safety nets, which destroyed jobs, instead of making them, and also forcing privatisation, before there were any sufficient competition and regulatory structures (Stiglitz 2007: 39; Kingsbury 2006; Stackhouse, 2007). The analysis shows that when other economic factors are not considered, globalisation will be terribly mismanaged and hurt, instead of help, economies. Another form of strength of Stiglitz’s views on globalisation is that he is an insider of the IMF and the WB. He knows what he is talking about, since he studied the actual policies and witnessed the dynamics of politics and economics inside these organisations. Engler (2007) highlights that through being part of these institutions; Stiglitz lends compelling credence and validity to his studies and findings. Ritzer (2010) confirms that Stiglitz is reliable, because he gives his “critique from within” (188). The fact that the IMF did not also take the needed research that Stiglitz did, because for the IMF, it seriously believed that it would do poor countries more good than harm if they adopted rapid liberalisation, privatisation, and deregulation. These arguments underscore the validity of the empirical claims and ethos of Stiglitz. Stiglitz lacks an ecological systems approach to the pitfalls of globalisation, because he neglects social (specific national factors, for instance), cultural and religious factors that are important in making globalization work. Stackhouse (2007) argues for the importance of greater context in globalisation. He says: “The role of religious difference in social conflict, the function of religion itself as a social force and the religious foundation for ethical arguments are all underplayed in the debate over the benefits and detriments of globalization.” For him, religion is a critical element in affecting globalisation as a process and how people experience it. He says that questions about power and politics cannot be detached from their cultural and spiritual dimensions. He contends that the West and others that followed it applied two economic-political models, “democratic capitalism and social democracy.” For the first one, economic efficiency and vitality were the main points; for the second, equality and social stability. Stackhouse (2007) notes that in “Globalization and Its Discontents,” Stiglitz focused too much on the "democratic" dimension of his studies, although his latter books underscored the importance of social justice. Stackhouse (2007) commends Stiglitz for his empirical approach to globalisation and its resolutions, but he argues that the latter continues to use traditional solutions that are insufficient. Stackhouse makes several good points. First, it is unclear what the moral passion of Stiglitz is, because he seems to be using “self-evident truths” that are not that self-evident. It is important to understand Stiglitz’s religious or spiritual views, because it will reveal the roots of his moral position (Stackhouse 2007). Stiglitz could be forcing his Western view and applying it to a radically diverse world, because he is not “offering any moral or ethical justification for doing so” (Stackhouse 2007). Stackhouse (2007) concludes that Stiglitz is like other leaders who think that economics and politics are the only important forces in human affairs, as if cultural and religious patterns and beliefs make no significance. This will result to an incomplete analysis of power, because religion and culture are strong forces that shape political and economic conditions. Culture and social factors are critical aspects of globalisation too. Dawson (2008) agrees that power cannot be understood without understand culture. Globalisation is a western concept and a westernising and Americanising process and how this affects national and sub-cultures must also be understood, before sweeping resolutions for its weaknesses can be attained. Bauman (1998, 2004) states that culture also suffers from globalisation and globalisation suffers from its homogenising culture, while Beck (2001) understands the cultural upsides and downsides of globalisation. Archer et al. (2007) reviews studies on culture milieus of globalisation. They conclude that as the economy and politics are globalised, they are also “culturalised” to some extent, because interactions occur symbolically (2). Ransome (2010) stresses that globalisation should also be understood from a global perspective. James Spickard, in his article "Human Rights, Religious Conflict, and Globalisation. Ultimate Values in a New World Order", examines the modern emergence of a global system of universalistic norms as expressed in human rights, and the associated rise of religious and ethnic particularism. He shows evidence that the developments can be described through the structural effects of augmented globalisation, and stresses that religious pluralism should also be politically managed. These articles have several themes in common: 1) globalisation is also a religious and cultural process and 2) Stiglitz does not integrate this view into his analyses, and so his recommendations are not realistic. Finally, Koechlin (2006) argues that Stiglitz makes radical conclusions from his empirical economic studies. He emphasises that “GID does not provide a careful, systematic discussion of globalization –its history, its tendencies, its multiple dimensions, its promise or its contradictions” (261). As a result, the validity of his claims is undermined. For instance, Stiglitz cannot directly connect poor macroeconomic policies with poor economic and social conditions without accounting for mediating factors, such as social awareness and political stability. For Koechlin (2006), Stiglitz need to go deeper and wider in his analyses. In conclusion, Stiglitz provides compelling writing and analyses about globalisation and its weaknesses. Unlike fundamentalist anti-globalist parties, he provides economic analysis and anecdotes to support his claims. Stiglitz is also an “insider,” which strengthens his authority and sources. However, Stiglitz also needs to considerably integrate cultural, religions, and other social indicators and outcomes of globalisation. An ecological systems approach to globalisation can help understand the micro and macro environmental factors, even individual motives and motivations of crucial leaders, which shape globalisation. He also needs to further substantiate his economic findings and determine the impacts of mediating factors on his conclusions and recommendations. I personally value and learned a great deal from Stiglitz about globalisation and it does not hurt to know the weaknesses of his arguments. Nonetheless, Stiglitz remains as one of the most foremost actors in the shaping of the discourse of globalisation and he serves as an inspiration for continued studies on the nuances of the processes and effects, as well as resolutions, to the weaknesses and negative impacts of globalisation. Reference List Archer, K., Bosman, M. M., Amen, M. M., and E. Schmidt. (2007) ‘Locating globalizations and cultures,’ Globalizations, Vol. 4 No. 1, pp.1-14. Bauman, Z. (1998) Globalization: the human consequences. 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