If the free market is the answer to the world’s woes, then why is so much of the world getting poorer? Nobel Prize–winning economist Stiglitz (The Roaring Nineties, 2003) ventures some persuasive answers.
There are many ways to make globalization work, writes Stiglitz. Regrettably, the U.S. and institutions such as the International Monetary Fund and the World Bank are not practicing any of them. Indeed, he argues, “the world’s sole superpower has simultaneously been pushing for economic globalization and weakening the political foundations necessary to make economic globalization work.” The U.S. consistently plays on an unlevel field, demanding that developing nations open their markets on terms dictated by American interests; globalization as it is now practiced demands that sovereign nations become less sovereign, even as it forces upon developing countries a one-size-fits-all economic system that “is inappropriate and often grossly damaging.” America’s insistence on the primacy of the free market really means a market that is free for the biggest players, though even a theoretically pure free market is not necessarily the best solution in many instances. For example, Stiglitz writes, many of the thriving economies of East Asia, such as China’s, are thoroughly managed, while social democracies such as those of Scandinavia channel much of the GDP into long-range, state-controlled financial sectors for the interest of future generations; meanwhile, free-market experiments in the former Soviet Union have proven disastrous except for a few lucky capitalists. Reining in inequalities is one of the foremost tasks for a globalism worthy of the name, Stiglitz suggests; those calling for Third World debt relief are on the right track. But there is more to it, he adds, including a rethinking of innovation-stifling intellectual property conventions and a restructuring of international institutions to serve their neediest constituents fairly.
A thoughtful essay that ought to provoke discussion in certain well-appointed offices, to say nothing of development and aid circles.