Adonis Diaries

Joseph Stieglitz “The Great Disillusion”. Part 2

Posted on: March 23, 2010

Part Two: “The Great Disillusion”; (Mar. 24, 2010)

Joseph Stieglitz, Nobel Prize for economics, stated in his book “The Great Disillusion, 2002”:

“Today, Globalization is not working; not for the poor of the world and developing States; not for the environment; and not for world economic stability.”

Although it is no longer feasible to abandon globalization, its management must be reformed according to greater consensus on the rules of the game that needs to be revisited for it to work.

Globalization has functioned relatively well in the Far East of Asia by promoting trades and technological exchange and transfer.

It also brought great successes in health progress and in galvanizing civil societies toward dynamic social justice and greater transparencies in policies and administration.

So far, the real culprits for the failure of globalization were the international institutions such as the World Bank (WB), the International Monetary Fund (IMF), and the World Commerce Organization (WCO).  Why?

These institutions fixed the rules of the game unilaterally to the profit of the developed States and specifically the USA: the US imposed options for recovery to other developing States that it had rejected for its own economic development.

Although these international institutions are public institutions they in fact are not accountable but to the Central Banks Chiefs and the corresponding ministers of the leading economic and financial States.

Thus, the international institutions that were meant to rescue faltering developing countries functioned mostly according to the interest of the industrial and developed nations.

There is great need for serious reforms to the financial structure and management practices.  Debates are demanded to be more open in World Forums.

Until now, it appears that the international institutions are not serious in engaging any reforms: they simply changed their discourse to mentioning “poverty” more often.

Financial interests dominated the ideology of the IMF as economic interests dominated the World Commerce Organization. The same as the IMF feels not concerned with the poor (its focuses is on banks crisis), and the WCO is ready to sacrifice everything to trade facilities for the rich nations. For example, environment and fishing industries that kill many varieties of fishes such as turtles and small fishes are considered as collateral damages.

The greatest challenge is in the mind of the institution structures because they simply reflect the state of mind of those they are responsible to. Their theses do not enjoy any consensus.

For example, the governor of a central bank starts his day by worrying of inflation statistics and not on its effects on the poor.  The minister of trade and commerce worries on export numbers and care less of pollution indexes.

There is a need for a functional economic global system vision such as it was extended by Adam Smith and Karl Marx.

Many States have better standard of living per capita than the USA and they still have much lower inequalities and far better health care systems.

It is how State governments intervene in the market that makes the difference in matter of health, unemployment, adequate retirees’ compensations, and social justice for all.

The performing States ensure high quality education, convenient infrastructures, independent efficient legal systems and regulations, technological development and innovations.

It is important that economic structure differ among States: some States have strong syndicates and others have high levels of debts among enterprises. Thus, alternative resolutions for financial and economic aid should be tailored made to economic structures in order not to penalize the entire society and the poorer of the poor.

The next post will provide details on reforms for collective global participation in the international institutions, the mode of governance of these institutions, and further transparency in their management and decision processes.

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adonis49

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