Review of Stiglitz's book
lnp3 at panix.com
Mon Jul 8 07:02:17 MDT 2002
The New Yorker, 07/15/2002
MASTER OF DISASTER
by JOHN CASSIDY
A leading economist says the protesters have a point about the I.M.F.
In 1998, Joseph Stiglitz, a Columbia professor who shared last year's Nobel
Prize in Economics, visited a village in rural Morocco where aid workers
had been encouraging local women to raise chickens. At the time, Stiglitz
was the chief economist of the World Bank, the Washington-based lending
agency, which was supporting the project. It had started out well. The
Moroccan government supplied the villagers with as many newly hatched
chicks as they needed. But at some point, Stiglitz says, the International
Monetary Fund, the World Bank's sister organization, told the Moroccan
government to leave the task of distributing chicks to private enterprise.
A for-profit firm agreed to supply the villagers, but it refused to
guarantee the chicks' survivala policy that had calamitous consequences.
The impoverished peasants refused to risk what little money they had on
livestock that were likely to die in large numbers in infancy, and the
nascent industry withered. When Stiglitz arrived in Morocco, the chicken
coops were empty. A promising attempt to alleviate poverty had failed.
It may seem like a long way from Moroccan chickens to the economic crisis
in Argentina, the recent financial upheavals in Southeast Asia, the
failures of post-Soviet capitalism, and anti-globalization protests on the
streets of Seattle and Genoa, but in "Globalization and Its Discontents"
(Norton; $24.95) Stiglitz argues that all these matters are related. In
promoting private enterprise wherever it can, the I.M.F. was following the
so-called Washington Consensus view of economic development, which sees the
expansion of free-market capitalism as the route to prosperity. With the
backing of the United States Department of the Treasury, the I.M.F. urges
governments everywhere to privatize, liberalize, and retrench. In the past
twenty-five years, many developing countries have followed this advice,
dismantling their public-sector enterprises and opening up their economies
to international trade and investment. As a result, the world has become
more interconnected than ever, with the level of exports, imports, and
cross-border investment all increasing sharply.
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