10706844 Joseph Stiglitz – CALQ Analysis

“The problem is not with globalization itself but in the way globalization has been managed. Economics has been driving globalization, especially through the lowering of communication and transportation costs. But politics has shaped it.” (Stiglitz 2006: 4)

The central theme within Stiglitz’s (2006) argument is of globalisation; it has brought both growth and instability. Initially it was hoped that globalisation would increase the global outcome, however there is a growing number of people in poverty. Globalization has increased insecurity and has not delivered the promised economic benefits. Globalisation has wider effects than just economic factors; these include environmental degradation, economic insecurity, inequality, and a new focus on economic materialism (Stiglitz, 2006:23). Stiglitz provides these arguments from an insider’s perspective on the role of multilateral institutions.

Some countries have advanced better than others, there are unbalanced outcomes within and between countries; this is due to the rules of the game being set by the advanced industrial countries. The problem is not globalisation, but the way that it has been managed. Economic globalisation has outpaced political globalisation; there is a chaotic, uncoordinated system of governance. Wealth is created but not shared, and there is no voice in shaping the process (Stiglitz, 2006:8).

Stiglitz demonstrates his argument on the following strands: transparency and accountability of organisations; the impact of globalisation on developing countries; the role of multilateral institutions within this process of globalisation; and the underlying discourse which drives the way that globalisation is managed. Concluding with a recommendation for the conditions in which globalisation could benefit lower income countries.

Transparency and accountability is a major issue within multilateral institutions, there is a lack of transparency, accountability and regulation within these global actors. It is agreed that decision making at the global level is flawed; there is a democratic deficit in international economic institutions, unilateralism exists across the process, and the structure and process which exists means that the less powerful voices are not heard (Stiglitz, 2006:18).The quality of these public/private institutions are a factor, issues of corruption, freedom of information and transparency are a major factor of success. There are issues of corruption, freedom of information and transparency. Limiting bank secrecy, increasing transparency, and enforcing anti bribery measures are some ways Stiglitz suggests in improving this issues (Stiglitz, 2006: 55-56).

The impact on developing countries of globalisation is that it has ‘limited countries’ capacity to respond to its citizens needs.’ Strong market forces are one feature of this, the nation state is being pressured by the forces of global economics and political demands for the devolution of power as countries are unable to control market flows (Stiglitz, 2006:20). Limitations are set by international agreements. These agreements can prevent governments from regulating the influx and outflow of capital. Markets can provide insurance against risk, but these are absent in developing countries (Stiglitz, 2006:21).

The role of multilateral institutions is asymmetrical and swayed towards Western countries’ interests. These institutions operate in an undemocratic way, as can be seen in aid conditionality (Stiglitz, 2006: 12).

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10706844 Joseph Stiglitz – CALQ Analysis

The underlying discourse is value driven, ‘the conventional wisdom that the United States’ development was the result of unfettered capitalism is wrong’ (Stiglitz, 2006:19).The debate about economic globalisation is mixed with debate about economic theory and values, there was little emphasis on equity and a paternalistic approach was originally taken. Suggestions Stiglitz (2006) gives for the conditions needed to make globalisation work are understandably at the global level, there is a need for more collective action in trade, capital and environment. A change in mindset is necessary and stronger emphasis on values such as ‘culture, the environment and life itself’ (Stiglitz, 2006: 24).

A more comprehensive approach to development is required; it would need to be sustainable, equitable and democratic. There is a danger in having a single minded focus, although a comprehensive approach is criticised by the World Bank, as this ‘lacks focus.’ “If economic growth is not shared, then development has failed” (Stiglitz, 2006: 45). It is necessary to strengthen markets and governments. People are at the core of development, and according to Stiglitz, development is transforming people’s lives not just economics (Stiglitz, 2006:50). We should create a more level playing field; even tilt it to developing countries to increase stability, security and growth (Stiglitz, 2006:59). The IMF should focus on stabilisation in crises, and act as a lender as a last resort. Developing nations should have more voice in the decision making process on national development strategies and the governance of multi-lateral institutions needs to change.

The main themes within Escobar’s ‘Encountering Development’ are the way the third world is represented, the domination and unequal power relations that exist, and a focus on political struggles and resistance to development. The mechanisms for change as suggested by Escobar would be to change the practices of knowing and doing. His attitude towards development and globalisation is in the way that he articulates the ethics of expert knowledge as a political practice, and suggests alternatives to modernity in decolonial projects (Escobar, 1995:11).The emergence and consolidation of the discourse and strategy of development since WWII as an oppressive and negative force on lower income countries concurs with Stiglitz’s view of globalisation as not bringing the promised benefits through the preciously outlined argument. The governance of social aspects of life was done by professionalization of development knowledge, and the institutionalisation of development practice (Escobar, 1995:17) Concurs with Stiglitz’s view of the rules of the game being unfair (Stiglitz, 2006:9). Weiss and Wilkinson (2014) also highlight how the term global governance has ‘frozen in time’ and its association have deprived it of meaning no analytical tool is provided to reflect a change in authority and the exercise of power (Weiss and Wilkinson, 2014:206).

Escobar (1995) deems the invention of development as an emergence of a strategy of economic reform, planning, organising and allocating resources, utilizing prescriptions, goals and quantifiable targets. This idea of development conforms to ideas and expectations of the affluent West, to follow this normal course of evolution and progress. This ties in with Stiglitz’s ideas about the way in which multilateral institutions are managed, however Escobar has a heavier focus on culture. Although Stiglitz does not deride capitalism as such, only in the way that it has been directed, Escobar believes that the spread of the market economy broke down community ties, and denied equal access to resources, the consolidation of capitalism made systematization of pauperism inevitable (Escobar, 1995)

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10706844 Joseph Stiglitz – CALQ Analysis

Escobar argues integration of lower income countries into the economic and political structures of the west was a method of imperialism and reflects structural and institutionalised power relations (Escobar 1995: 162).The division between economic and political power became blurred. The state's influence on the control of prices, labour, and resources increased, new mechanisms of administration and bargaining were developed (Escobar, 1995: 68). Weiss and Wilkinson (2014: 208) argue here that global governance has deprived it of a greater capacity to understand change. Stiglitz (2006) focuses on how these structures are value driven, lacking in transparency, the role of multilateral institutions are unequal, and the impact globalisation had due to the rapid pace of capitalism and governance being unable to keep up. According to Escobar, technology is used as a moral force (Escobar, 1995: 36). Stiglitz views technology as a way to improve development (Stiglitz, 2006:5) technocrats are where Escobar and Stiglitz converge in agreement; they are an instrument in managing development, and are according to Escobar what shaped the discourse of development (Escobar, 1995:38), and according to Stiglitz technocrats miss out on important political, social and economic dimensions (Stiglitz, 2006: 142). Weiss and Wilkinson (2014:208) assert that global governance has resulted in imprecision, and is an inferior conceptual tool to understand the organisation of the world and the exercise of power.

Mechanisms for change vary according to the authors Weiss and Wilkinson, Escobar, and Stiglitz. Escobar suggests that a change in practice of knowing and doing needs to occur, whereas Stiglitz recommends better theories and data, tailored interventions that remove obstacles such as adjustment of states to global competitiveness. Weiss and Wilkinson (2014: 215) similarly assert with Stiglitz that a more complete framework of global governance is required, unpacking complexity and like Escobar, examine the relations between authority and power, from a historical and current perspective. “Defining global governance will lead us to critically view the actors and their cooperation within this process.” (Weiss and Wilkinson, 2014: 213)

How far is it possible to develop a definition and examination of global governance which takes into consideration the varying approaches to development, e.g. sustainability, world systems, inclusive development.

Considering the time frame of these three articles, from 1995 until present, what is the current focus of global systems of governance ad how could culture be used as a new driver for change?

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10706844 Joseph Stiglitz – CALQ Analysis

References

Escobar, A. (1995) Encountering Development. The Making and Unmaking of theThird World

Weiss, T.G. and Wilkinson, R. (2014). Rethinking Global Governance? Complexity, Authority, Power, Change, International Studies Quarterly (2014) 58, 207–215

Stiglitz, J. (2006) Making Globalization work, London: Penguin Books.

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