The shadows of globalization

from Wikipedia, the free encyclopedia

Die Schatten der Globalisierung ( Globalization and Its Discontents in the original ) is the title of a non-fiction book by Joseph E. Stiglitz from 2002. In it, the neoliberal orientation of the globalization of the economy is criticized. The book has been translated into over 30 languages.

Core theses of the book

Stiglitz opening chapters with the titles What Global Institutions Promise and Broken Promises already indicate the thrust of the book. His aim is to refer the Bretton Woods institutions, the World Bank and the International Monetary Fund (IMF) to their promises, their founding program from 1944. The promises made at that time have been broken, and course corrections in the global economy are necessary. He mentions the history of the Bretton Woods Agreement only briefly; it mainly deals with current politics, especially the IMF's policy in the 1990s.

In his book, Stiglitz denounces the IMF's policy since the 1980s as a major obstacle on the way to prosperity and development. The radical market ideology of the IMF, according to his core thesis, not only has failed to show any success in terms of poverty reduction , but on the contrary, it exacerbates the global gap between rich and poor .

Globalization term

Stiglitz defines globalization as "the closer interdependence of countries and peoples of the world" (p. 25). He names their causes

  • technical advances (in particular the "huge reduction in transport and communication costs"),
  • political decisions to dismantle barriers to integration.

His assessment of globalization is neutral: "Globalization in itself is neither good nor bad" (p. 38). He sees its current negative effects as determined by the global balance of power, which enables a powerful minority (the "special interests of the commercial and financial world" of the "richest industrialized countries"; p. 36) to "at the expense of the great majority" (p. 37 ) to benefit from the increasing interdependence. These interest groups exert their influence through barely democratically controlled international economic-political organizations whose leadership positions they have held since 1981. Some East Asian countries, which "opened up to globalization on their terms and at the pace that suited them" (p. 38), "benefited enormously" from the increase in interdependence in his eyes.

Asian crisis and transformation in Eastern Europe

The most important pillars of this thesis are his analyzes of the Asian crisis of 1997 and the rapid downturn in the Russian economy after the end of the Soviet Union (Chapters four and five). In both cases, said Stiglitz, the IMF is partly to blame. His crisis management did not have a containment effect in Asia, but made a decisive contribution to worsening the crisis - the few countries, such as China, which did not follow the IMF's recommendations, were able to protect themselves from the effects of the crisis or to cushion its effects.

Stiglitz attributes the incorrect advice to an exclusively market-centered policy of the IMF, which forced the developing and transition countries to hastily liberalize their financial markets and abolish all capital controls. These measures were intended to facilitate faster investment, but above all, facilitated capital flight and foreign exchange speculation . With the liberalized financial markets, the states would have completely surrendered themselves to the world market - if they wanted to prevent capital flight in a crisis or protect their currency against speculation, they could not do so through legal regulations, but only through their own action in the market, for example through support purchases for their own Currency, achieve. To make these support purchases, they again had to rely on the grace of the IMF. He tied his loan commitments to conditions that were based on purely fiscal criteria, namely monetary stability (no inflation ), the priority of debt repayment and balanced trade balances. For example, countries were forced to interrupt investments in the education system or to discontinue subsidies for staple foods in order to be able to present the IMF with a balanced state budget. Social unrest such as in Indonesia were the result.

Stiglitz also opposes the thesis that the reduction of subsidies and other measures of the IMF are necessary cuts in order to stabilize the national economies and to secure the prosperity of the population in the long term. Using the example of Russia and the shock therapy recommended by the IMF , that is, the fastest possible and more or less uncontrolled privatization of the Soviet economy, he demonstrates the failure of the IMF prescriptions.

The economy was privatized before the general conditions of a market economy were even remotely established . Above all, Stiglitz mentions legal security, a functioning tax system , citizens' trust in democratic institutions, and functioning supervisory bodies for banks and companies . The hasty privatization of the state-owned companies in Russia and the liberalized capital markets, on the other hand, made it possible for the new “owners” of the former collectives to smash them , to sell the individual components and to generate the income abroad. Economic incentives for productive use of the old state-owned enterprises did not exist, but the settlement promised immediate billions in profits.

Thanks to the liberalized capital markets, these could then be exchanged immediately for US dollars , the ruble lost purchasing power and inflation galloped.

The damage limitation of the IMF, in turn, consisted in granting more and more loans in the billions (so-called " bail-outs ") with which the government of Boris Yeltsin could support the ruble and continue the robbery privatization. The longed-for economic equilibrium has not been achieved to this day, and the loans and the proceeds from privatization disappeared from the Swiss accounts of a new oligarch clique.

Stiglitz, however, opposes the view that the IMF, which is essentially dependent on the USA, has carried out this economic dismantling of Russia cynically and deliberately; Rather, he attributes the failed policy to the ideological frozen interest of the financial world in low inflation and the fear of national bankruptcy or controlled insolvency. Stiglitz quite openly describes the IMF as being dominated by the interests of the financial world, while the World Trade Organization (WTO) is the organ of trade interests.

With the interests of finance capital represented by a majority of the IMF , he explains its one-sided, always the same recommendations in every economic crisis, for every economy : containment of inflation at any price, avoidance of national bankruptcy, further privatizations. Because there is no worse specter for finance capital than inflation and national bankruptcy, which always mean billions in losses for creditors (although this could be beneficial for the economy as a whole) - while privatizations usually yield state-secured and guaranteed revenues. Coupled with the wrong recommendations of the IMF, its bail-outs and support loans drove developing and transition countries deeper and deeper into the debt crisis instead of containing it.

Stiglitz's recommendations

Stiglitz recommends that the IMF return to its actual task: intervention in crises in the world economy. He rejects the forced liberalization of the capital markets as a condition for loans received and other interventions in the internal economic constitution of the developing countries; they contradict democratic principles and mostly only serve the interests of the creditors in the industrialized countries. An important step on this path for him is therefore the abolition of the strict political conditions with which the IMF links its loans. They are the central instrument for implementing the IMF agenda and de facto override the sovereignty and democratic control of the dependent states. The conditions are to be replaced by selective loans: countries with successful stabilization concepts of their own receive support, the initiative remains on the ground.

If the crisis can no longer be averted, moratoriums and insolvencies should increasingly be used instead of postponing the crisis with further loans and ultimately increasing the national debt mountain. In order to mitigate the social consequences of the debt crisis, Stiglitz also calls for help from the industrialized countries in setting up functioning social security systems in the poorer regions of the world, as well as debt relief for over-indebted countries.

expenditure

German

Web links

Footnotes

  1. ↑ Joseph Stieglitz's website: Curriculum Vitae ( Memento of the original from May 13, 2011 in the Internet Archive ) Info: The archive link has been inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. (PDF; 338 kB). P. 51  @1@ 2Template: Webachiv / IABot / www2.gsb.columbia.edu