Web Assignment 13: Joe Stiglitz's International Anti-Neoliberalism: Peacock Students

Of all those arguing that the world economy was being badly managed in the interests of the rich in the 1990s and early 2000s, the most articulate was Joseph Stiglitz.

Surf over to http://delong.typepad.com/pe101/virtual_discussions/ and then to http://delong.typepad.com/PE101/2007/08/web-assignme-13.html. Write a comment of at least 200 words on what you think of some aspect of Stiglitz's position on how the world should be governed. Contribute to the discussion that is ongoing at http://delong.typepad.com/PE101/2007/08/web-assignment-13.html--that is, react and respond to not just Stiglitz but, to the extent it is appropriate, the earlier posters and commenters on the webpage.

Due by 5 PM on November 27

Comments

[Eric Silverman]

Very few readings have spoken to me like these past articles. Unknowingly, I have agreed with Stiglitz’s point of view this entire year, but have only been able to articulate it in a haphazard, un-developed manner. I say this because I think that he has eloquently outlined the perfect balance of this neo-Liberal world. He has broken the religion of liberal marketization, demonstrating that institutions only came to fruition because of historically specific circumstances, and it is unrealistic to think that they can simply be transported. However, this concept goes for all intuitions, and there needs to be a dialogue of global integration within every single unique society. So it is not enough to say that the East Asian Miracle was the main affront to an economically hegemonic world, but rather was a demonstration of a society’s ability to co-exist within this new world order.

I really appreciate Stiglitz’s idea of an international human community. I also found that he highlighted one of the biggest problems in the American ideological ethos. The rhetoric found in American politics is of universalism. Mainly the notion a universal world order will inevitably lead to universal peace and prosperity is dominant. Forcing other countries into that neat little box has proven to cause just as many problems as it has solved. We are insiders looking out prescribing the same medicine to every patient, no matter their symptoms or allergies.

I also found his criticism of market institutions to be intriguing. It treats people as blind profit seekers while subverting the idea of the general good. Decoding the human genome could have so many benefits for all mankind, and the fact that the first person to decode it has a monopoly seems intrinsically flawed. Frankly, it is not enough to say, “well it has its problems…but liberalism is the best we can do.” There needs to be room to evolve in this dynamic global community that we live in.

[Karina Tregub]

Joseph Stiglitz presents some very appealing and logical interpretations of future international politics and the dynamics of modern globalization. He successfully articulates the political nuances within the financial frameworks of such international institutions as the IMF and the World Bank, and presents a keen observation of their successes and limitations within today’s interdependent world. Stiglitz attributes many of the World Bank’s policy failures to its unwillingness for open dialogue and debate. He believes that in order for economic policies to achieve their objectives, there has to be an ongoing dialogue, where different policies are available for debate, and various sides are debating them. In his opinion, making political decisions with a select few behind closed doors is not the way to success, and only makes the World Bank less capable of delivering on its responsibilities. I was intrigued by this discussion because it made me slightly skeptical of its possibility, despite my agreement with Stiglitz. Although international politics today is different from the way it was 30 or even 15 years ago, it is still not capable of complete honesty and openness. Unfortunately, the global market that exists today creates winners and losers. The countries that are rich are getting richer because of the other, less developed countries that are helping them achieve this status. The international financial institutions that advise the poor countries are made up of countries that benefit from them, and if they were to become richer and more successful, they would no longer bring as much of an advantage to the rich countries as they do now. It is naïve to ignore the fact that ulterior motives do come into play when making economic policy and enacting certain international regulations, even within such arbitrary institutions as the World Bank and the IMF.
This brings me to another point I felt Stiglitz made well, which was the necessity of a multipolar world, in order for progress and prosperity in the future. He placed a very large emphasis on Europe’s role in this multipolar world, and although I felt he slightly overestimated Europe’s world influence, I agreed that it must be one of the central forces in this multiplicity. The power of Europe lies in its success as a union, not just an economic union, but one that holds similar values and goals. This is a powerful and influential image that Europe upholds for the rest of the world. It shows that economic growth and prosperity is not everything, and that the fate of our globe rests on our ability to create a world community, what Eric calls the international human community. No matter how difficult this may be to achieve, especially with the differing ideologies that continue to tear countries apart, it is imperative that this goal not be forgotten, and that we strive towards a more unified international society, where each individual understands his/her power not just within their community, nation, or specific market, but within the entire modern world.

[Evan Fleming]

Stiglitz presents an extremely thorough analysis of the ways globalization has assisted in the development of our capitalistic economy today, and the many things that globalization has fallen short in accomplishing. It is in no way a surprise that in this year 2007, globalization has emerged as an international phenomenon and is gaining momentum and influencing many aspects of our global society that some might have never thought it could reach. In evaluating where to begin to rectify the strategic failures in the globalization model, Stiglitz addresses a variety of key issues and developments that, if they continue, will exponentially increase the inequalities in our world where developing countries are hit hardest.

Two of Stiglitz points struck a chord with me that I think are essential in mitigating finding a feasible approach to making the global economy equally beneficial to all who are affected. The first is the idea of remodeling and restructuring the failed democratic institutions set in place that have lead to inadequate global governance. The second, an approach that I am sure is often overlooked, is the idea of trying to strengthen international camaraderie. Even though economically we have become closer and more dependent on each other, our loyalty to each other has not changed, and I think this is a fundamental problem.

In briefly addressing the concept of failed global governance, international organizations such as the IMF and World Bank paramount in repairing this issue. The flaws, I believe, lie in the leadership of these organizations and the fact that the economic decisions are made from a top down approach, and there is not a concrete understanding of what the real problem is, thus affecting an effective solution. Stiglitz assertion that “Economic globalization outpacing political globalization” could not ring more true in that there is a lack of global political institutions that are strong and powerful enough to dictate and channel the progress of economic globalization. Under developed nations will continue to suffer from excessive debt, poverty, and economic inequality if an organization is not established to solely deal with this problem.

Lastly, as mentioned previously, international loyalty in our world is seriously lacking. Rich countries profit from the poor by means of the global economy, but could care less about their well-being. This mentality must change, and change fast, in order for developing countries to dig themselves out of a whole that has gotten deeper because of globalization.

[Dave Koken]

I agree very much with Julia’s description of Stiglitz’ work. In his various speeches I was able to see what I believe to be the most coherent and balanced theory of political economy that we have read all semester. He gives careful consideration to not only economic policies, but to how those policies are largely reliant on social/cultural conditions for their success. He draws several conclusions from his careful analysis, but the aspects of his work that I found most interesting were his continuing insistence on creating more individualized approaches to development and the different paths that he foresaw for countries undergoing this process.

Seeing the importance of a country’s unique social conditions with its own set of values and societal goals, Stiglitz remarks, “Successful policies are very contingent on circumstances and that it is only through the exchange of information that we are able to extract the contingencies that are the relevant ones for a particular country.” Although he remains a believer in capitalism and democracy, Stiglitz explains one of his largest criticisms toward international institutions that claim to represent those values by the previous quote. Despite their wealth of empirical knowledge, he argues, they often fail to understand essential local dynamics when creating development plans. The answer he proposes is increased dialogue among the developing country, international institutions and independent third parties to act as balancers. Stiglitz hopes that this kind of democratic dialogue will better prepare countries to make decisions that will create economic conditions more aligned with their cultural values and will avoid the crises he encountered during his tenure with the World Bank.

The essential implication of this process, one which Stiglitz explicates very well, in his speech on China, is that a general acceptance of “western” ideas of development can lead to very different kinds of societies. Choosing to develop markets and create democratic institutions in other words, does not encompass all of a society’s values. When discussing the Chinese strategy of “crossing the river by feeling the stones” he argues that, “now that China has gone more than half way across the river, what is on the other side is clearer. It is clearer that are many different forms of a market economy…What kind of market economy it chooses will affect what kind of society it will create.” Recognizing these different potential paths and creating processes by which countries can determine which is right for them, I think, is one of the most important challenges of our time.

[Irina Zeylikovich]

Stiglitz manages to accomplish something pretty incredible: he makes economic reading enthralling while still getting his point across. I found his emphasis on dialogue and adaptability to be especially intriguing – it is about time someone strongly and repeatedly stated there is no magical economic panacea (or magic bullet, to use his phrase) that can be applied to every country universally. Every nation needs to “learn how to learn.” Stiglitz sounded like a more mitigated James Scott when he wrote of the importance of local knowledge, but at the same time he factored in a role for third party international institutions. His experiences not only in the political realm (working for the Clinton administration) but also in the economic, for the World Bank, make him a person well worth listening to – I think he embodies the type of dialogue he hopes to engender, a combination of political and economic elements that need to work together to function successfully.

I can appreciate his emphasis on open dialogue, and mostly I agree with him. However, it seems as though he presents it as too simple a solution. In his system of dialogue I can see lengthy arguments between the political sector and the technocratic, also the technocratic could potentially be spending a lot of time explaining complex interactions to the politicians who have not studied them. Then again, it does not seem right to have either body decide policy alone – so Stiglitz is definitely on to something, but I think finding a system that will make it work efficiently will be the difficult part.

[Connie Lim]

I find much valuable and agreeable material in Stiglitz’s work, Title. In his perspectives regarding neo-liberal capitalism, I find his specific analyses very interesting; the discussion that stood out to me the most in his work was regarding the topic of investment, and how particular practices in China affect both China’s populations and relations with the United States of America. Since there is such a huge amount of saving in China, and a huge lack of saving in our country, there seems to be a major tone of dependency between the US and China. China lends its money to the US, and the US utilizes this money to continue its heavy consumption habits, rather than fixing its many domestic problems.

On China’s behalf, the government is funneling out a lot of its money for foreign relations. What I like about Stiglitz’s commentary is that he believes China should be investing more in its people. Stiglitz’s take on China’s current situation is very practical and productive. He does not create a strong sense of dichotomy between the US and China. Rather, he emphasizes each country’s domestic needs for the success of each country’s individual economy. Although he does place attention on the fact that US and Chinese relations create an unbalanced dynamic, I appreciate that he does not create any dramatic upheaval within his academic perspectives. Here, Stiglitz places a refreshing perspective to our academic discourse; there is no particular formula that each country must follow in order to succeed in our international economy, or to provide adequate resources for its people. There is a unique demand that comes with each different area; this is where Stiglitz gains the acclaim from many of my classmates (e.g., Dave Koken’s response).

He makes it a point to clarify what needs to be done, rather than what should be done. There is no formula, but there definitely is the need to examine one’s own economy and the needs of its populations. He nicely brings in some ideals of Polanyi here, as Julia mentions, by bringing in the importance of government intervention and regulation. Again, Stiglitz brings in thoughts and opinions that seem realistic and reasonable. His discourse jives quite well with our contemporary perspectives on global relations.

[Ziwei Hu]

I agree with Dave that Stiglitz presents "the most coherent and balanced theory of political economy that we have read this semester.” He clearly ties together a lot of the ideas we have been discussing all semester and applies it to the global arena. Stiglitz explains what has gone wrong with globalization, and prescribes various means by which we can make it work. Because he is a firm believer in capitalism and democracy, he is unrelenting in his criticism of international institutions, which have only served to exacerbate the democratic deficit that exists in global governance

Stiglitz then provides some suggestions to remedy this democratic deficit. He describes the current system as being a “chaotic, uncoordinated system of global governance without global government”, and as being structurally biased in favor of the elite in developing countries. A key example of this inequity can be found in the subsidies that the United States, the EU, and Japan pay to their farmers. Stiglitz writes that “it is better to be a cow in Europe than to be a poor person in a developing country.” These agricultural subsidies are a blatant example of hypocrisy; while encouraging developing countries to liberalize and remove trade barriers, developed countries are practicing protectionism. In an article entitled “I’m Ripping You Off”, New York Times columnist Nicholas Kristof, who also happens to own farmland in Oregon, writes that the government is paying him $588 a year not to plant anything on his land. Kristof echoes Stiglitz in his article when he writes that these subsidies don’t even benefit the average American family farmer- only large agri-businesses. Furthermore, subsidies worsen inequity on the global agriculture markets.

Thus, globalization can’t work until the developed countries end their double standards. However, this kind of policy reform will be difficult, indeed. Stiglitz writes that many leaders in developed countries “may be fully committed to [ending global poverty], but only so long as it does not cost them anything.”

[Beth Dukes]

Like all the other posters before me, I found Stiglitz’s piece a great read and an interesting commentary on globalization and the idea of a world market. Furthermore, I think he is one of the first readers we have encountered in this class that successfully argues against certain aspects of a market economy without falling into the trap of advocating an equally, or more problematic ideology.

As Julia has already pointed out, Stiglitz’s ideas seem to echo some of the thinkers we have previously read in this course and even in PEIS 100. While reading the book, I felt like he took these thinkers’ sentiments and turned them into ideas. In my first paper for this class, I suggested that two particular thinkers, Smith and Keynes, seem to share a “humanist” view of capitalism—where neither governments nor the “all-powerful market” dictated the flow of the economy—based on the fact that both seem to understand the interconnectedness of individuals in the international world market. However, until reading Stiglitz, the idea of what this “humanist” version of capitalism could look like was something very unclear to me.

That’s not to say that I think that Stiglitz has hit the nail on the head; few, if any, political economists ever do. However, I do agree with previous posters that his call for policies that cease to benefit developed countries through harming others, for increased social/political cooperation on an international level, and for political and economic structures to be founded upon the social, cultural, and historical contexts and not upon Western ideology (an argument I found distinctly different and more compelling than that of Scott, whom I felt pointed merely to one particular Western ideology or lack thereof as the grounds for failure or success in development states) are a great start in mitigating some of the gross problems of globalization in the 21st century.

[Madeleine Dale]

Stiglitz’s main point is that globalization is neither good nor bad. The benefits of globalization are not being extended all over the world, while the harm it causes has yet to be contained. The main problem is “global governance without global governance”. Stiglitz believes that the problem in global governance is a lack of dialogue from all parties involved (especially those affected by the processes of globalization). I very much agree with Stiglitz that institutions like the WTO, IMF, the World Bank, and even units like the UN Security Council have dictated global governance and have been entirely responsible for making decisions about all the countries in the world, but these units are run by elite countries and their governments who have benefited from globalization from the get-go, so how can they really know what would be the best way to respond to Rwandan Genocide or poverty in Somalia?
Stiglitz believes that dialogue never happened in these instances and that is the reason that policies in the past have failed. I like the fact that Stiglitz acknowledges the need for a human aspect of development and globalization. He says that the dialogue needs to include individuals who know the facts on the ground and who can represent the so-called “crisis” situations from personal experience. I believe that although this type of dialogue would very much further complicate the processes of global governance, I think that it is the only way to truly approach governing the world. If global government is to act democratically or at least representatively and fairly, decisions cannot be made over the heads of those affected. Like Karina wrote, “Although international politics today is different from the way it was 30 or even 15 years ago, it is still not capable of complete honesty and openness”. I believe that once we reach the point where decisions are no longer being made this way, globalization will be heading in the right direction – it will extend to all actors in the global system and it will no longer be so harmful.
Like Eric Silverman, I also highly appreciate Stiglitz’s idea of an international human community. There is a big problem in our country of people believing that American politics are and should be universal politics. The problem that comes from this is that with the U.S. having so much clout in groups like the IMF, The World Bank, and the UN, American politics gets translated onto the process of global governance. Essentially, the fear is that American government will become global government. Finally, like Irina pointed out, Stiglitz is definitely on to something but I don’t think he has prescribed anything profound that will solve this problem. I think that it will be a long road from where we are to where we want to be, and with the works of writers like Stiglitz, we are slowly but surely lengthening the shadow of our future in a direction in which we should be going.

[Edward Lee]

Stiglitz does a good job paying close attention to details in his piece. The idea of having case specific plans or institutions for any aspect of any nation is important in Stiglitz’s view. His optimism and ideas for having very detail oriented plans for the advancement of a nation seem great theoretically. However, that would require much more resources and intelligent man power, especially in a world where the first is declining and the latter is becoming more competitive. The gap between advanced nations and lesser ones has already created a flow that prevents the latter from catching up. He explains how the communication between global organizations is crucial for the positive advancement of everyone globally. The problem with this is that certain nations or institutions that are already in the seat of power will not give that up for the “betterment” of everyone else. The power of greed and self advancement is almost innate and has been ingrained into the minds of most prosperous people. If communication between powerful institutions and governments could be aligned with market and social forces for the benefit of everyone, then Stiglitz’s ideas may have a chance in the world. His ideas would be great, but I think they are a little too advanced for our time and/or too optimistic in a world where greed, conflict, and poverty are abundant.