Globalization and its
Discontents
-Prof. Joseph E. Stiglitz, Columbia
University, New York
International bureaucrats--the faceless
symbols of the world economic order-are under attack everywhere. Formerly uneventful
meetings of obscure technocrats discussing mundane subjects such as concessional loans and
trade quotas have now become the scene of raising street battles and use demonstrations.
The protests at the Seattle meeting of the WTO in 1999 were a shock. The death of a
protestor in Genoa 2001 was just the beginning of what may be many more casualties.
Almost overnight, globalization has become
the most pressing issue of our time, something debated from boardrooms to op-ed pages and
in schools all over the world. A growing divide between the haves and the have-nots has
left increasing numbers in the Third World in dire poverty, leaving than on less than a
dollar a day. Despite repeated promises of poverty reduction made over the last decade of
the twentieth century, the actual number of people leaving in poverty has actually
increased by almost hundred million. This occurred at the same that total world income
actually increased by an average of 2.5 annually. In Africa, the high aspirations
following colonial independence have been largely unfulfilled. Instead, the continent
plunges deeper into misery. Crises in Asia and in Latin America have threatened the
economies and the stability of all developing counties. Globalization and the introduction
of a market economy has not produced the promised results in Russia and most of the other
economies making the transition form communism to the market. Instead, it brought
unprecedented poverty. To understand what went wrong, it's important to look at the three
main institutions that govern globalization: the IMF, the World Bank, and the WTO.
The IMF and the World Bank both originated in
World War II as a result of the UN Monetary and Financial Conference at Bretton Woods, New
Hampshire, in July 1944, part of a concerted effort to finance the rebuilding of Europe
after the devastation of World War II and to save the world from future economic
depressions. The IMF is a public institution, established with money provided by taxpayers
around the world. This is important to remember because it does not report directly to
either the citizens who finance it or those whose life it affects. Rather, it reports to
the ministries of finance and the central banks of the governments of the world. They
assert their control through a complicated voting arrangement based largely on the
economic power of the countries at the end of World War II. There have been some minor
adjustments since, but the major developed countries run the show, with only one country,
the United States, having effective veto.
The most dramatic change in these
institutions occurred in the 1980s, the era when Ronald Reagan and Margaret Thatcher
preached free market ideology in the United States an the United Kingdom. The IMF and the
World Bank became the new missionary institutions through which these ideas were pushed on
the reluctant poor countries that often badly needed their loans and grants. The two
institutions could have provided countries with alternative perspectives on some of the
challenges of development and transition, and in doing so they might have strengthened
democratic processes. But they were both driven by the collective will of the G-7, and too
often, the last thing they wanted was lively democratic debate about alternative
strategies.
Underlying the problems of the IMF and the
other international economic institutions is the problem of governance: who decides what
they do. The institutions are dominated not just by the wealthiest countries but by
commercial and financial interests in those countries. And the policies of the
institutions naturally reflect this. The choice of heads for these institutions symbolize
the institutions' problem. While almost all the activities of the IMF and the World Bank
today are in the developing world, they are led by representatives from the industrialized
nations. They are chosen behind closed doors, and it has never even been viewed as a
prerequisite that the head should have experience in developing world.
Globalization today is not working for many
of the world's poor. It is not working for much of the environment. It is not working for
the stability of the global economy. The transition from communism to a market-economy has
been so badly managed that, with the exception of China, Vietnam and a few Eastern
European countries, poverty has soared as incomes have plummeted.
To some, there is an easy answer: Abandon
globalization. That is neither feasible nor desirable. Globalization has brought better
health, as well as an active global civil society fighting for more democracy and greater
social justice. The problem is not with globalization but how it has been managed. The
demand for reform is palpable—from the congressionally appointed commissions and
foundations-supported groups of eminent economists writing reports on changes in the
global financial architecture to the protests that mark almost every international
meeting. The IMF and the WB have changed their rhetoric—there is much more talk about
poverty and at least at the WB, there is a sincere attempt to leave up to its commitments
to 'put the country in the driver's seat' in its programs in many countries. But many of
the critics of the international institutions are skeptical. I believe that globalization
can be reshaped to realize its potential for good. We can't go back on globalization; it
is here to stay. The issue is how can we make it work. The most fundamental change in
governance. This entails, at the IMF and the World Bank, a change in voting rights, and in
all of the international economic institutions changes to ensure that it is not just the
voices of trade ministers that are heard in the WTO or the voices of the finance ministers
and treasuries that are heard at the IMF and World Bank. Effective participation requires
that representatives of the developing countries be well informed. Because the countries
are poor, they simply cannot afford the kinds of staff that the United States, for
instance, can muster to support its positions at all the international economic
institutions. If the developed countries were serious about paying more attention to the
voices of the developing countries, they could help fund a think-tank – independent
from the international economic organizations – that would help them formulate
strategies and positions.
Short of a fundamental change in their
governance, the most important way to ensure that the international economic institutions
are more responsive to the poor, to the environment, to the broader political and social
concerns that I have emphasized, is to increase openness and transparency. In my mind,
among the key reforms required are the following:
* Acceptance of the dangers of capital market
liberalization, and of short-term capital flows ("hot money"): bankruptcy
reforms and standstills. The appropriate way of addressing problems when private borrowers
cannot repay creditors, whether domestic or foreign, is through bankruptcy, not through an
IMF-financed bailout of creditors. The problems of defaults on public indebtedness (as in
Argentina) are more complicated, but again there needs to be more reliance on bankruptcies
and standstills, a point that the IMF too seems belatedly to have accepted. But the IMF
cannot play the central role. The IMF is a major creditor, and the creditor countries
dominate it. A bankruptcy system in which the creditor or his representative is also the
bankruptcy judgement will never be accepted as fair.
* Improved banking regulation: Financial
sector deregulation and the excessive reliance on capital adequacy standards has been
misguided and destabilizing. Thailand was right to have restricted speculative real estate
lending in the 1980s. It was wrong to encourage the Thais to eliminate these restrictions.
* Improved risk management: Today, countries
around the world face enormous risk from volatility of exchange rates. Surely the
developed countries are much better able to handle these risks than the less developed
countries, and they should help develop these insurance markets.
* Improved safety nets: The developing
countries require not only that aid be given in a way that helps their development but
also that there be more aid. Relatively small amounts of money could make enormous
differences in promoting health and literacy. There needs be a basis for funding this
assistance on a more sustained level, free from the vagaries of domestic politics in the
United States or elsewhere. A proposal entails using the revenues from global economic
resources – the minerals in the seabed and fishing rights in the oceans – to
help finance development assistance.
* Dept forgiveness: without the forgiveness
of debt, many of the developing countries simply cannot grow. Huge proportions of their
current exports go to repaying loans to the developed countries. The Jubilee 2000 movement
mobilized enormous international support for debt forgiveness. By the end of 2000, as a
result of international pressure, twenty-four countries had passed the threshold. But debt
relief needs to go further: as it stands now, the agreements touch only the poorest of the
countries.
But the international institutions must
undertake the perhaps painful changes that will enable them to play the role they should
be playing to make globalization work, and work just not for the well-off and the
industrial countries, but for the poor and developing nations. The developed world needs
to do its part to reform the international institutions that govern globalization. We set
up these institutions and we need to work to fix them. If we are to address the legitimate
concerns of those who have expressed a discontent with globalization, if we are to make
globalization for the billions of the people for whom it has not, if we are to make
globalization with a human face succeed, then our voices must be raised. We can't, we
should not, stand idly by.
The author was chief economist at the
World Bank and economic advisor to Bill Clinton. Today he teaches at Columbia University
in New York. Last year he was awarded the Nobel Prize for Economics. Text courtesy:
Deutschland N 4/2002 August/September. Embassy of Germany in Kathmandu.
"Lack of understanding
in couples is a cause of misery"
-Suzanne Kepes, Psychotherapist and
Gynecologist, France
So how do relationships between the
sexes look today in France? My assessment is based on extended observation and listening
to thousands of women, men and couples over half a century and from thousands of people
who have come to see me as a result of problems in their emotional and sex lives: single
people, men and women after divorce or who are single but not from choice, female couples
and homosexual men.
Constant, insidious, or violent conflicts
within the couple lead to a state of stress, anxiety, constant unhappiness, poor
self-image and poor image of the partner, but also to guilt, fits of rage or even hatred,
which are harmful to the health of both partners. Depression, solitude that is hard to
endure and psychosomatic illness can become chronic and disabling.
Men have found it hard to accept women's
independence and feel confused by this new type of women who will and can't represent the
image and role of the mother. In recent years I have wondered whether there was not a kind
of jealousy, even fear or simply apprehension, of these new women.
On the other hand, men have never known much
about female sexuality, universally repressed, and continue to believe, even today, that
the masculine model, which they have been given, is the only one and that it is applicable
to women. For their part, women are too often unfamiliar with their own bodies, their own
desires, and they do not dare talk to their man about it, for fear of annoying him or of
being abandoned.
It is urgent that we develop a greater
understanding of female sexuality and psychology among men, and vice versa; that we
recognize that, in private life, for both partners to be happy, we have to take an
interest in the pleasure of the other rather than our own pleasure, that we must introduce
dialogue and communication in to our daily lives. I believe that, in the end, the future
depends on men becoming aware of and developing their female side, which is too often
ignored or even denied. |
