Blog PostsReading Joseph Stiglitz
By Jeff Richards at Sep 03, 2008 |
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Reading Joseph Stiglitz
Joseph Stiglitz: Globalization and its Discontents.
So why is this book important? It is important primarily because of its author. Joseph Stiglitz not only won the Nobel Prize for economics in 2001. He is also one of the leading intellectuals and policy makers of US and International financial elites. If you look at his CV, which can be Googled on the net, you can see his deep connections to networks of global power. The two most prominent positions he held were the chairman of the Council of Economic Advisers from 1995 to 1997, a cabinet level position in the Clinton Government and Senior Vice President and chief economist of the World Bank.
The story in this book is a familiar one. It is about the economic catastrophe created by the policies used by international economic institutions during the 1990s. The agenda at the time was set by the International monetary fund, an organisation then dominated by neoliberals who wanted to replace state intervention with unhindered, minimally regulated markets. The book outlines the now well known story of the consequences of that policy.
During the 1990s, two international institutions dominated the global (dis) order. One was the International Monetary Fund (IMF); the other was the World Bank. Stiglitz worked for, and was an advocate of the policy strategies of the World Bank. These two institutions had very different attitudes to the management of the international economy.
‘Globalisation and its Discontents' is essentially a polemic against the IMF, the organisation whose policy strategies were dominant through the 1990s. The book outlines the case against the IMF and puts forward a different way of managing regional and international capitalist crises.
The key phrase here is ‘discontents'. It is about managing the discontent created by the expansion and transformation of the capitalist system. The failure and destruction of ‘state socialism' or ‘communist economic systems' has given 21st century capitalism vast new spaces for expansion that are both geographical and sociological. Vast new regions of capitalist expansion include China Russia and Eastern Europe. Within states, capitalist economic relations have reached deeper into society (with labour movements providing increasingly diminished resistance). Markets are increasingly the sole regulators of the relationship between labour and capital. An increasingly large swathe of human activity has become ‘financialised' or subjected to the activities of markets.
While this has given markets a vast range of new opportunities, it has also created many problems, the product of the contradictory forces that markets generate. An added problem is the increased scope for anarchy following the disintegration of state socialism and organised labour. Before the 1990s, social discontent generally operated under the direct or indirect influence of communist or social democratic elites. Even in very difficult historical periods, one could still ‘contain' or ‘manage' outbursts of popular discontent. With the fragmentation of political leaderships (itself a product of late capitalisms capacity to dissolve social relations), social discontent has become increasingly unpredictable.
Divisions within ruling elites are largely the product of discontents that neoliberal capitalism is creating. At the centre of the arguments among ruling elites is the place of the state in the global economic system. There are widely differing views on this question among ruling elites, as this book illustrates. Stiglitz argues that the state must not be marginalised, that rulers must not be seduced by neoliberal ideologies that are reflexively anti-state. The book is a warning against those who seek to diminish the role of states in managing the world economy.
So why is this important for those on the radical left? We are a long way from having a major political influence. When that day comes (the magic 15% of the polity will be the turning point.) we will need to understand the necessity to play off divisions among ruling elites as an essential part of the survival strategy of a radical left government.
In reading this book I was amazed at Stiglitz's seeming ignorance of economic history. It is often said that a large proportion of economists have no interest in or no desire to understand history. However, one does not expect this of Nobel Prize winners. I was struck by Stiglitz's rather shallow and conventional descriptions of communist economic systems (i.e. pre capitalist Russian and Chinese economic systems) For all of his education, there seems to be a lack of familiarity with all the ground breaking research work done by economic, political, and cultural historians of communist economic systems (Alec Nove; Moshe Lewin; EH Carr; Isaac Deutscher; Sheila Fitzpatrick; Ivan Szelenyi; Franz Schurmann; Bill Brugger to name a few from the ‘classical age'- all available from any research library). One cannot understand the evolution of these economic systems without a deep historical understanding. How else can one understand why the USSR failed and the People's Republic of China is now a contender for the most powerful capitalist state in the 21st century?
Friday, 15 August 2008
