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By Huned Contractor Among those who decide about economic policies, Nobel economics laureate Joseph Stiglitz of the United States is a heretic. For the anti-globalisation protestors, he is the outsider who has now gained entry into the inner circle. Currently professor of economics and finance at Columbia University in New York, Stiglitz was a member of the US Council of Economic Advisors (CEA) from 1993-95, during the Clinton administration. He served as CEA chairman from 1995-97, and went on to become chief economist and senior vice-president of the World Bank in 1997. He resigned his position at the World Bank following disagreements over the conditions the World Bank and the IMF were imposing on countries following the East Asian currency crisis. His recent book titled Globalisation and its Discontents has received worldwide acclaim for its sharp critique of the policies of the World Bank and the IMF. In Mumbai as a key speaker at the World Social Forum 2004, held between January 16 and 21, Stiglitz did not mince his words when it came to economic insecurity around the world. "The World Bank and IMF-sponsored structural adjustment programmes have increased this insecurity in developing countries, and the resulting job insecurity has led to a rising graph of violence and civil conflict," he said. Of the firm view that the WSF platform allows people to voice a variety of concerns which get left out in other international fora, especially in the context of trade policy, Stiglitz believes that the need of the hour is to remove the disparity between political and economic globalisation. "When it comes to economic decisions, these are taken at an international level, but the same mechanism is not available to do so democratically on the political front. For instance, the current U S administration does not believe in democracy at an international level. It uses the rhetoric but goes ahead with what it wants," Stiglitz says. Elaborating on why he has made the IMF and World Bank his 'favourite' enemies, Stiglitz says that the belief of the IMF in markets has been ideological, not pragmatic. "The policies have evolved as a consensus between the US treasury and the World Bank without involving other countries. All that has been done is to push for markets in developing countries without outlining adequate limitations," he says. What this implies is that developed countries have got rid of trade barriers in other countries but are not willing to reciprocate. "This makes the bargaining scale pretty lopsided," adds Stiglitz. So what is the solution? "Those in Mexico, Brazil, India and other emerging markets should be told a different message: Do not strive for a mythical free-market economy which has never existed. Do not follow the encomiums of US special interests because, although they preach free markets, back home they rely on the government to advance their aims. Instead, developing economies should look carefully, not at what the US says, but at what it did in the years when it emerged as an industrial power, and what it does today. There is a remarkable similarity between those policies and the activist measures pursued by the highly successful East Asian economies over the past two decades," says Stiglitz. On the recent hue and cry about outsourcing by American companies to India, Stiglitz says it is nothing but another form of hypocrisy. "The problem is not outsourcing to India but bad economic macro management by the Bush administration and the outsourcing of manufacturing jobs to China. Also, if workers are not allowed easy access into the US, jobs will move to wherever there is competitive advantage," he says. As regards the current debate about forming an alternative to the IMF, Stiglitz has strong reason to believe that there are enough reserves in countries like India, China and Japan to create an Asian Monetary Fund. "The idea was mooted way back in 1997 but it was thwarted by the combined strength of the IMF and the World Bank. Basically, these two bodies do not want any competition," says Stiglitz. He finds this rather strange, considering that healthy competition is finally what leads to healthy markets, whether local or global. -- InfoChange News & Features, January 2004
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