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Posted June 1, 2009
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Good analysis, poor politics
In this thought-provoking book, Stiglitz examines the failures of globalisation and of free trade, the current intellectual property rights regime, the pillage of resources, climate change, the multinational corporations' impact, the debt burden, the dollar's role as the world's reserve currency, and globalisation's effects on democracy and sovereignty. He believes the problem is not globalisation but the way it has been managed.
He notes of globalisation post-1990, "unchecked by competition to 'win the hearts and minds' of those in the Third World, the advanced industrial countries actually created a global trade regime that helped their special corporate and financial interests, and hurt the poorest countries of the world."
So Third World countries have got deeper into debt. Apart from China, poverty in the developing world has increased since 1980: 40% of the world, 2.6 billion people, are poor. The number of Africans in extreme poverty has doubled. In 2001 the USA and the EU agreed to focus on developing countries' needs, but, as Stiglitz points out, they reneged. Why don't necessary reforms ever get put into practice?
He points out, "the pursuit of self-interest by CEOs, accountants, and investment banks did not lead to economic efficiency, but rather to a bubble accompanied by massive misallocation of resources." This refutes his later, oddly slight, argument for capitalism: "Markets are essential; markets help allocate resources, ensuring that they are well deployed." No - 'profitably', not 'well'.
He points out that current economic policy serves ruling class interests: "Wealth generates power, the power that enables the ruling class to maintain that wealth."
He exposes the class conflict at the centre of economic life. He observes, "the European Central Bank pursues a monetary policy that, while it may do wonders for bond markets by keeping inflation low and bond prices high, has left Europe's growth and employment in shambles." And he asks, "Where will the people of the developed countries and their governments stand? In support of the few in those countries who own and run the rich corporations, or in support of the billions in the developing countries whose well-being, in some cases, whose very survival, is at stake?"
His analysis is brilliant, but his proposals rely on ruling classes choosing to act against their own interests: he proposes reforms he knows they won't accept.
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Posted June 2, 2011