It’s that time of year again: the G8 is meeting, this time in
Kananaskis, Canada, and the protestors are out. “Their one overriding
message:” as Jon Stewart said on the Daily Show last night, “we
don’t have an overriding message”.
The protestors say that the mainstream news media doesn’t take
them seriously, and saddles them with labels like “anarchists”
which only serve to marginalise them further. This is probably true,
but the fact is that it’s hard to sum up any given protestor’s
opinion in a simple-to-understand slogan, and there are in any case
nearly as many opinions as there are protestors. That’s why CNN,
say, will bring on a right-wing isolationist like Pat Buchanan to represent
opposition to the G8/WTO/whatever: he’s not representative, but
at least he’s engaged in conventional political debate.
What this means in practice is that the educated public remains decidedly
unclear as to exactly who the goodies and the baddies are. They might
not trust the politicians, but they certainly don’t like Pat Buchanan,
and a lot of the protestors seem a lot like the hippies of the 60s and
70s: haven’t we outgrown that?
After all, while the crusties and the trade unionists make lots of
noise outside, the educated men in suits seem to be trying to come up
with the best way to avert and/or resolve financial crises. They speak
the language of the middle classes: fiscal prudence, financial market
liberalisation, wanting to ensure that their money is well spent.
And every so often the WTO or IMF will seem to make some kind of concession
to the protestors: more transparency here, an official mandate to bring
down poverty there. So they’re listening, right?
Wrong. For the first time, we’ve been given a book
which lays out in the clearest and most authoritative of terms just
how misguided and destructive these multilateral institutions can be.
Globalization and its Discontents is the biggest challenge to
date of the IMF’s hegemony, and is required reading for anybody interested
in international development, emerging markets or free trade. The author,
Joe Stiglitz, needs no introduction from me: one of the world’s greatest
living economists (he won the Nobel Prize for his work on information
asymmetries; he also wrote the standard economics undergraduate textbook),
Stiglitz also had the perfect vantage point from which to observe the
IMF’s response to the Asian and Russian crises of 1997-8: he was chief
economist of the World Bank.
Stiglitz grew increasingly frustrated at the Fund’s arrogant and willful
refusal to listen to basic economic common sense, and eventually, rather
than shut up, resigned from the Bank. He penned an explosive article
for The New Republic, which formed the basis of the new book; the difference
is that the book has a lot more weight behind it, and is if anything
even more powerful now for refusing to pull any of the earlier punches
despite the passage of a couple of years.
I think the title of the book is a mistake: Stiglitz himself makes
it very clear that he’s not against globalization per se, just the selfish
version of it propagated by G7 trade and finance ministers. He is an
economist, after all, so he’s perfectly happy extolling the virtues
of free trade or privatisation, so long as they happen in the right
place in the economic development of a country. But he makes a very
strong case that in an imperfect world, acts like tariff reduction and
market liberalisation have to be considered means to an end, and that
often they’re more destructive than constructive.
Yet still we get the likes of Stiglitz’s Columbia University colleague,
Jagdish Bhagwati, writing
in the accursed Economist that it’s a "misconception"
to say that the rich countries have wickedly held on to their trade
barriers against poor countries, while using the Bretton Woods institutions
to force down the poor countries’ own trade barriers. Here he is defending
In fact, asymmetry of trade barriers goes the other
way. Take industrial tariffs. As of today, rich-country tariffs average
3%; poor countries’ tariffs average 13%. Nor do peaks in tariffs—concentrated
in textiles and clothing, fisheries and footwear, and clearly directed
at the poor countries—change the picture much: the United Nations
Council for Trade, Aid and Development (UNCTAD) has estimated that they
apply to only a third of poor-country exports.