Making Globalization Work
Making Globalization Work
Summary
Joseph E. Stiglitz, in Making Globalization Work, provides creative solutions to institutional problems such as fiscal instability, financial indebtedness of poor countries, and global pollution[1]. In addition, Stiglitz advocates for a reformation of global financial institutions, intellectual property agreements, and trade laws. He does this with an aim of making global institutions best placed to respond to the widening economic gap between countries. Globalization brings together world citizens into a single community, hence the need to think and act globally. Stiglitz book is an intellectual resource that is powerful and invaluable, in the process of the development of the global economy.
Review
In comparison to books on globalization such as Friedman’s “The World is Flat”or Sach’s The End of Poverty, Stiglitz provides a crucial book on globalization. It provides an insight into the structural problems that the transition economies must confront, and presents concrete suggestions for policy[2]. Stiglitz observes the policies of the International Monetary Fund and World Bank for the immediate, past two to three decades. He notes that the policies have been a failure in creating a significant growth in per capita income in the impoverished parts of the world. In self-defense of the apparently functional policies, the global financial institutions blame the developing countries for poor governance and institutions. Stiglitz, however, ignores the entire argument and credit is to him.
Despite the positives, however, the book falls short of high standards of progressive economic policy writing as modeled by authors such as John M. Keynes. The author, Stiglitz, aspires to the standard hence it is fair to evaluate the book from the perspective of progressive economic policy writing. In contrast to mainstream economists, Joseph Stiglitz became popular by authoring several publications, in which he uses mathematical models to represent optimization problems that economists seek to resolve on a daily basis. Classical economists focused on the actions of collective actors, and not the action of individual actors. In line with classical approaches, Stiglitz maintains that relationships among collective actors determine income distribution, influence technical progress and supply, and determine relative prices.
Joseph Stiglitz takes the reader through a journey highlighting issues of trade laws, intellectual property rights, global warming, and the responsibility of multinational institutions. Each chapter poses a problem, provides analysis, and proposes solutions. In almost every page, Stiglitz argues that the current international trade laws are a product of developed nations, enforced to serve their objectives. He argues that globalization comes with a promise for success. In his view, they are inefficient and inequitable. Rich nations manipulate global trade rules, in order to protect their farmers and factories from competition from efficient producers, in the developing world[3]. Stiglitz states in the book that multinational, corporate organizations evade responsibility for the damage they cause. On its part, the International Monetary Fund, the leader of global financial systems, provides rewards to improvident lenders (rich nations) and penalties to hapless debtors (developing nations).
Stiglitz also invokes the issue of negative externalities, i.e. the costs imposed on individuals, firms, and nations by others. For instance, a production firm that evades measures of pollution control may make large profits, but harm the society[4]. Such a producer is exploiting opportunities while avoiding to bear the cost of its actions. In the same way, interest groups in developed nations gain from favorable treatment by relevant governments. However, such favors victimize competitors in developing countries. In making the claim concrete, Stiglitz provides the example of cotton farmers in America who access several billion dollars in government subsidies.
The effect is that it depresses the global price of cotton, discouraging millions of cotton farmers in the African continent. In relation to private endeavors, it is the role of the government to stop perpetrators and help repair the damage, in situations that involve social losses. This is the basis for his argument on pollution control, public health restrictions, fisheries management, and other social control measures. The author makes a constant call for action against the impact of externalities in the environment, corporate activity, and trade matters.
Joseph Stiglitz applies his mastery of economic logic to produce quality discussions involving complex issues of patent rights and international trade. Stiglitz adds to the criticism of drug manufacturers arguing that they charge poor nations higher prices of drugs than developed countries. The practice is immoral and economically inefficient[5]. Poor people should access drugs at a cheap price; otherwise the prevailing demand goes to waste. The book makes arguments that are uncontroversial. A reader does not find it difficult to agree that opportunities for economic endeavors are not available widely enough. In addition, it is not controversial to state that rich countries have done little to provide solutions to economic problems. It is also agreeable that financial crises are too frequent and costly.
However, some of the arguments expresses Stiglitz appear biased. He praises the development policies of East Asia known for labor repression and restriction of democracy. In addition to the seeming bias of his ideas, he does not seem to find any fault in developing nation governments for the problems they face. His policy proposals are weak. In response to the distorted economic order, he proposes the creation of an institution such as global reserve system to facilitate a fair international trade, and discourage corruption and despotism. One can, therefore, wonder why governments that run the world want to do this and why should we expect new institutions to function without bias. It is difficult to disagree with Stiglitz book, but he seems to assume focusing policies at the international level will work. This is suspect because a democratic policy control is more likely at the national level than international level. This is because is because leaders are accountable to their respective countries.
In conclusion, Making Globalization Work is a book that provides optimism and hope that the society has the capacity to address global challenges through international integration. It is true that the society benefits from integrated efforts that address disease, poverty, and environmental issues. However, the problem lies with Stiglitz proposals, which rely on moral imperatives, public opinion, and the will to address issues of national and private entities that may not perceive the potential of global solutions. Implementation of the proposals may not be viable given the prevailing political systems. Overall, the book carries positive intentions and a comprehensive description of the international trade.
Reference
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