An insider’s account of the ill-considered effort to make a free market of the Third World, an effort that, described here, favors the rich and robs the poor.
The title’s echo of Sigmund Freud is shrewd, if a little misleading, for whereas Freud’s great Civilization and Its Discontents was an encompassing look at the neurosis-making qualities of Western life, Stiglitz’s confines itself to the workings of but two policy-making and -effecting organizations, the World Bank and the International Monetary Fund. This he does very well. Intimately acquainted with their work—he served as an economic advisor to the Clinton administration and as the World Bank’s chief economist and senior vice president—Stiglitz charges that both organizations have abandoned their original missions. “The IMF was supposed to limit itself to matters of macro-economics in dealing with a country . . . and the World Bank was supposed to be in charge of structural issues,” he writes, but, with the advent of the free-market-worshipping Reagan administration, both took an activist, even imperial view that demanded that developing countries throw open their doors to capitalism. The results were often disastrous as wealth and resources flowed out of such countries and into the hands of the First World, Stiglitz writes, particularly in the case of newly democratic Russia, which, he notes sadly, “must treat what has happened as pillage of national assets, a theft for which the nation can never be recompensed.” Stiglitz’s prescriptions for the establishment of a truly global but more equitable economy are unabashedly Keynesian and generally convincing. They include slowing the pace of capitalist expansion until developing countries can adjust politically and socially to new financial systems, giving more and better aid to those countries, forgiving debt—and thoroughly overhauling the World Bank, IMF, and other instruments of development.
Provocative, readable, and sure to earn Stiglitz persona non grata status in certain corridors of power.