Globalization and Its Discontents

“A half century after its founding, it is clear that the IMF has failed in its mission. It has not done what it was supposed to do—provide funds for countries facing an economic downturn, to enable the country to restore itself to close to full employment. In spite of the fact that our understanding of economic processes has increased enormously during the last fifty years, and in spite of IMF’s efforts during the past quarter century, crises around the world have been more frequent and (with the exception of the Great Depression) deeper.”

This opening statement sets up the theme of The Failures of Market Fundamentalism and IMF Policy for the rest of the book. Stiglitz highlights the extent of the IMF’s failure. He criticizes the organization for not only failing in its primary mission to maintain global economic stability but also ironically exacerbating the problem.

“Globalization itself is neither good nor bad. It has the power to do enormous good, and for the countries of East Asia, who have embraced globalization under their own terms, at their own pace, it has been an enormous benefit, in spite of the setback of the 1997 crisis. But in much of the world it has not brought comparable benefits. For many, it seems closer to an unmitigated disaster.”

Although the author is highly critical of the international institutions that uphold and regulate the process of globalization, he does not believe globalization itself to be the problem on an inherent level. Rather, he asserts that international free markets, just like domestic free markets, are capable of failure and need adequate regulation. Globalization is an inevitable process, but the international organizations that are supposed to regulate it are not doing so fairly.

“Modern high-tech warfare is designed to remove physical contact: dropping bombs from 50,000 feet ensures that one does not ‘feel’ what one does. Modern economic management is similar: from one’s luxury hotel, one can callously impose policies about which one would think twice if one knew the people whose lives one was destroying.”

This passage critiques the IMF for being too detached from the realities of the developing world. It highlights how insular and isolated its analysts are from the local situation, even though their decisions can have severe and lasting consequences. This standard procedure does not foster empathy and instead encourages IMF workers to see their project as merely an economic venture rather than a humanitarian endeavor.