Making Globalization Work

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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Government can be the solution

One of the key objectives of this book, Making Globalization Work was to prove that the problem with globalization is not the concept of globalization, but how it has been managed. Therefore the book presented many different ways that globalization has failed and suggestions for solutions. I believe the book makes an excellent case for the advantages of government intervention in pushing the economy in a positive way. Many believe that government can add little to the economy and that in general, innovation is stymied by government rules and regulations. However, Stiglitz makes the case that this theory is mostly rhetoric and in the real world, government regulations can protect and encourage innovation. The reason for the difference between the theory and reality is asymmetrical relationships. Economic theory assumes a perfect world in which everyone has access to all information, equal access to capital, labor, information, etc. The reality is that all parties do not have equal access to capital, labor, or information. Successful governments have focused on practicalities, even if that meant ignoring or modifying IMF recommendations. Globalization can create winners, but not everyone will be a winner. Some will be losers, and society must realize that in order to maintain civil order and stability, it will need to impose ways to spread some of the winnings around. Of course, the winners will complain and object, but it must be done. Without the changes, globalization might continue, but the will to support it will weaken, leading us to a less stable future. So a brighter future requires that everyone gives a little, and mostly that will require that governments require that the benefits of globalization be spread out through taxes, regulations, requirements, etc.

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Globallization affects Societies Differently

Most of the rules and policies made in developed nations are not beneficial to developing nations

Informed prescription for the future of globalization

Just about every major gathering of world leaders draws determined, often violent, protests against globalization. If you wonder why, Joseph E. Stiglitz's book explains ample reasons. The Nobel Prize-winning economist follows up his 2002 book, Globalization and Its Discontents, with further analysis of pressing economic, political and environmental concerns, and the conflicts they engender between developing and developed countries. He doesn't just dwell on the dreadful problems he outlines in such knowledgeable detail. He also offers remedies and reforms, though some seem quite idealistic for a notable economist who sees so clearly what has gone wrong. His book is densely packed with data, case studies and facts, but Stiglitz intersperses the dry material with thoughtful asides on the questions of morality and equity that globalization must answer. getAbstract finds that his book will enlighten readers about the challenges and consequences of globalization on humankind's one and only planet.

Read more about this book in the online summary:
http://www.getabstract.com/summary/5843/making-globalization-work.html

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