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2007

Making Globalization Work. Joseph Stiglitz - Jim Miles Book Review
Friday, 07 September 2007 09:19
by Jim Miles
Having read Stiglitz' first work, "Globalization and its Discontents", having thought at the time that it was a strong work, then having read his second book "Fair Trade For All", which is not even mentioned in this current work — indicating perhaps that he is not that proud of it, as he should not be, it was terrible — and now having read his latest book "Making Globalization Work", I am now thoroughly disenchanted with his ideas and thought development.

"Making Globalization Work" is much like his first book in that it is a reasonably clear read, and while there is by necessity the use of the economic and political lexicon (that's jargon for 'jargon'), it is not so obtuse (that's jargon for difficult) that it is not unreadable. It is simply not well argued, and retains the major faults that were obvious in the middle  work, "Fair Trade For All". [1]

From that previous work, I criticized his development — or lack thereof — on such issues as social development, the environment, democracy, and the military. These remain his weaknesses in the current book, weaknesses that are built into his pattern of thinking, and even though there are chapters or sections of chapters on these, they are simply longer dissertations in the same manner of thinking. Longer does not mean better.

There remains a complete lack of discussion on several important aspects of 'globalization' that are ignored almost entirely. The military, other than for a few passing comments that lead nowhere, receives no recognition at all, although "trade in arms" is mentioned a few times then passed by. The United Nations receives equally short shrift, and is not really brought into the discussion until the final chapter on democratizing globalization (in Stiglitz' arguments this becomes pretty much an oxymoron) and even then only receives passing recognition for very small sections of its overall functioning.

If I can read Stiglitz as a person, I would say that his heart is very humanistic, but his mind is still very much in the capitalist/corporate mode of the World Bank/IMF/WTO line of thought. Yes, at heart, Stiglitz is a socialist, an international socialist, yet that word never sees the pages of his work, but he comes close in the closing pages arguing for a "global social compact". In thought he remains captive to all his years of World Bank and IMF structured economic thinking and cannot break away from it to make some truly courageous statements about how to reorder globalization.

No one can argue that globalization is not taking place. It has been for centuries, although again recognized here as being a more recent phenomenon. Certainly it is a different phenomenon today, but 'globalization' per se has existed ever since empires have stretched their boundaries and flexed their military muscles in order to capture more than their 'fair' share of the wealth of the globe. I will not reiterate the failures of his arguments here as they are not much different than in my previous review, they would only be longer as they contradict his longer exposition (see Note 1 again).

For all and any of his arguments, they are completely subsumed by his lack of success in arguing for changing the democratic deficit, his pro corporate arguments, and his non-recognition of the neo-colonial military mode of economic operation that the U.S. currently uses.

To be sure, the chapter "Democratizing Globalization" does attempt to reconcile the idea that economic globalization in terms of 'free trade' has little to do with democracy (my words, but gleaned from his lack of attention to democracy as a force for economic prosperity). The democratization he presents here concerns mostly that within the IMF/WTO as he argues that "one of the successes of the last three decades has been the creation of strong democracies in many parts of the developing world," yet still the IMF and WTO have prevailed over these democracies. Stiglitz' democratizing arguments are  not so much for democracy in the pure people power sense but as its lack in the way globalization "has been managed."

For more democracy then, the world needs a change in the voting structures of the IMF and World Bank. Also there needs to be a change in representation so that when an environmental issue is raised, then the concerned environment ministers are involved. If Canada is an example of environmental ministry, we would be no better off, possibly worse off, as the unctuous sheen of responsibility would reflect attention off the underlying corporate machinations.

The true irony of his arguments is that the IMF//World Bank should do as they have been telling everyone else to do for the past few decades: more "transparency", a nice word, been around for a long time and is well used; conflict of interest rules and regulations, again nice phrase, Dick Cheney should be made aware of it; openness, another well used and somewhat meaningless word; accountability, another well used, familiar phrase that has been shown to be meaningless except as IMF/World  Bank/corporate/political rhetoric and jingoism. Using these 'same old — same  old' arguments I would not expect any greater success within these organizations than they ever cared for previously. Within themselves, as embodiments of global corporate structures, these organizations are the least democratic of any organizations in the world (except perhaps the Bilderberg and and Carlyle Groups and the ‘Bohemian Grove’ and others of their kind) and their chances for rehabilitation into democratic institutions I would rate as nil.

How about this alternative — simply get rid of the IMF — completely — throw it
out like any other proven useless concept, but remember its useful lessons on
how it failed — and the WTO — completely, as per John Bolton, would anyone
really notice if the top ten stories of the WTO headquarters in Geneva disappeared (other than for the big hole in the ground) — and the World Bank, but have an effective World Bank fully restructured under a more democratically organized United Nations. “Simplistic" the economists will utter; "Naïve" the politicians will sneer; "Madness," the CEO laughs.

Yes, more power to the people — more democracy — can be dangerous for the corporate organizations of the world.

For a moment let me return to these corporations before discussing the UN and the neo-colonial military. Stiglitz' chapter on "The Multinational Corporation" is where he truly displays his resistance to significant and democratic change by lauding the virtues of the corporate world.

Stiglitz briefly presents a half dozen unsupported ideas as to why corporations are good, and for someone so intent on using and abusing statistics as economists are, the lack of supporting stats is interesting. According to Stiglitz the advantages of corporations are: enabling "the goods of developing countries to reach the markets of advanced industrial  countries"; they have the ability to let producers know "almost instantly what international customers want"; they help bridge "the knowledge gap"; they narrow "the resource gap"; they have brought jobs and economic growth to the developing nations and inexpensive goods of increasingly high quality to the developed ones"; and finally they have lowered "the cost of living": leading to "an era of low inflation and low interest rates."

So what's wrong with all these feeling good items? Certainly "goods" from developing countries reach the advanced industrial markets, but those goods are mainly in the form of resources extracted for a pittance or 'industrial agricultural' crops such as coffee, bananas, sugar cane, and cocoa that deprive the locals of subsistence farming, increase the costs of the land base as corporations own and control the land, and force many indigenous peoples into towns where they become sources of cheap labour.

Stiglitz' most laughable argument is his contention that consumers "want" everything while barely noting that without advertising, without the constant propaganda pressure of buying more and more unnecessary goods for the pure sake of keeping the consumptive economy going, these 'wants' would disappear quite rapidly. The world is constantly bombarded with this consumptive mentality through all media; it is almost impossible to avoid and because it is so predominant, it seems so normal. The real beneficiary to consumers 'wants' remains the corporations, not the consumer.

The knowledge gap can hardly be claimed to be bridged by corporations without supporting evidence. The greatest increase in global literacy (one significant measure of the ‘knowledge gap’) as measured by the UN shows it occurred across the globe in the decades of the 1960s, '70s and '80s, in both developed and undeveloped countries. Knowledge has always travelled quite freely; if nothing else, corporations try to restrict that transfer with patents and lawsuits against products and natural resources  (DNA, plant medicines) that they claim as their own. As for the transfer of technology aspect of the argument, most of that transfer remains under control of the companies within the country they operate in; and more to the point, technology will transfer without corporations as it historically always has in the past.

As for the 'resource gap', a phrase that sounds meaningfully academic, I cannot say that I know what that is without some more information from Stiglitz, for certainly the developed countries are mainly interested in the resources of the undeveloped: the minerals, the oil (not even discussed in this book in spite of its predominance in global resource wars), the agricultural products, the cheap non-mobile labour. Nice term, not terribly meaningful, except perhaps to other economists.

After all his arguments about how 'economic growth' as measured by the GDP per capita or gross national total is a poor measure of wealth measurement (something he finally gets right in this work compared to the previous two) — because a GDP increase statistically can mask a large increase in disparity and increasing and deepening poverty among the poor — he then contradicts it all by saying corporations provide growth. Are not these the same people that run the IMF, that people the WTO, that rule the World Bank, that concurrently try to rule the world and measure it all with GDP growth statistics?

Finally, the era of low inflation and low interest rates has little to do with corporate 'good' but is much more centred on the U.S. Treasury controlling the economy in its ridiculously high state of indebtedness by artificially manipulating interest rates to increase consumptive borrowing for more of those unneeded 'wants'. Certainly housing is needed and lower interest rates help, but they are contrived more and used more to promote corporate wealth within the real estate economy (and keep the war going, financed via Chinese purchases of Treasury bonds) and finance other purchases within the consumptive lifestyle promulgated by the corporations.

Without a much better developed argument Stiglitz cannot just with great ease and facility throw out his reasons why corporations are good as sound bites that he expects the reader to accept without further evidence.

Returning to the UN, where we should truly be if we are to make 'globalization' work in a democratic manner, the reader finds another 'deficit' in Stiglitz' approach to the world economy. As much as the UN is flawed and has serious problems, it can probably be reformed much more readily than the corporate based IMF/World Bank/WTO regimes that at their base are fully non-democratic corporate constructions. To reform the latter  requires some great demolition and excavating; to reform the UN requires mostly super-structural work.

To start with, eliminate the Security Council and make it more of a global cabinet, chosen from the UN's elected representatives, proportionally as per population of region (and not appointed as in many countries). Subsume the World Bank completely to the UN and have it operate on principles that encourage the betterment of the people of the world over and above the false statistics of the GDP. Its decision making process could be designed to force it to be 'open', 'transparent' and democratic with regards to the member states of the UN, the majority of whom are currently totally dissatisfied with the current IMF/World Bank operations.

The UN could also liaison with the World Courts in Brussels, and while Stiglitz argues for more institutions to support globalization, we need not more, but better, more fully supported, and more accessible World Court functions as well as the same for other UN agencies. Parts of state national courts could be integrated into the World Court system such that nation states could prosecute under internationally accepted laws. And as above, completely disband the IMF and current World Bank. There is probably not much that can be done about the WTO directly, but limits on its pursuit of corporate happiness could certainly be obtained under the democratic proceedings of a revived UN General Assembly.

That revival could include having the Security Council be the body that implements General Assembly decisions and motions, rather than being the only true source of power in the UN. And rather than having the Security Council have any member carry a veto, the veto power should go to the General Assembly to over-ride Security Council decisions. Messy and slower, but democracy tends to be that way when it is true democracy.

My final argument arrives at Stiglitz largest and most glaring error when he is discussing globalization — the lack of any reference to the global military economy. He does argue for arms restrictions between WTO/IMF trading partners via the trade agreements; he does, in a completely undeveloped throw away phrase argue that the only "conditionality" to trade agreements "is probably nuclear proliferation — only countries that commit themselves fully to a non-nuclear regime would be eligible." Well, there goes the world's economy to hell right there. Other than that, nothing.

I cannot believe that Stiglitz is ignorant of the manner in which global corporations, national governments, and the military institutions are so heavily inter-twined; that he is ignorant of the U.S. military budget being larger than all the rest of the world’s military budgets combined; that he is ignorant that “It represents a massive financial injection into virtually every local economy in the [U.S.];[2]” that he is ignorant of the war in Iraq and that its essential purpose is to control the oil regimes of the world and thus support the U.S. dollar as the reserve dollar for the world; that he is ignorant of all the recorded modern history of neo-colonialism through covert and overt military and quasi military interventions throughout the world, the 'hidden fist' of the jingoistic Thomas Friedman; that he is ignorant of Dick Cheney's and Condaleeza Rice's and Bush's relations with big oil and other militarily oriented companies.

For globalization to work democratically, the military needs to go home and disassociate itself from business and be subject to the democratic processes of their home governments, which includes abiding by the norms of international law as set out by the Geneva Conventions, the UN Charter, and all other related human rights laws. Only then can "fair trade” ever even begin to be fair: fair in its support of a sustainable environment; fair in its support of working people and working conditions and their rights to safe conditions and proper organizations (if all conditions of 'fairness' were in place, most likely there would be no concerns about labour mobility or illegal immigration); fair in its support of education and health services; fair in its equality for all humans and all cultures; and fair in its accounting for the value of resources of all kinds on the global market exchange.

While I believe that Stiglitz has his heart in the right place, his head is still well within the confines of the World Bank that he departed from physically several years ago. His recommendations in "Making Globalization Work" are narrow and shallow and will not address the problems with our current form of 'globalization'. His last comment about a "global social compact" reveals his heart. We have the beginnings of that within the UN
Charter, within the Geneva Conventions, within the totality of international law. It is from there that we must work in order to obtain a truly globalized democracy.

[1] see Book Review “Fair Trade for All

[2] Burman, Stephen. The State of the American Empire – How the USA Shapes the World. University of California Press, 2007. p. 68. A wonderfully informative book I am concurrently reading along with Stiglitz.

Jim Miles is a Canadian educator and a regular contributor/columnist of opinion pieces and book reviews to Palestine Chronicles. His interest in this topic stems originally from an environmental perspective, which encompasses the militarization and economic subjugation of the global community and its commodification by corporate governance and by the American government.
 
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