Making Globalization Work
Joseph Stiglitz
Penguin, 384pp, £20.00

Professor Stiglitz has two unshakeable beliefs: that globalisation currently fails the developing world, and that matters would be vastly improved if the rest of us would only follow his advice. Justifying his first belief, he shows how increased trade alone (even with an elusive ‘level playing field’) may increase GDP while simultaneously exacerbating inequality and failing to raise basic living standards. His attacks on the International Monetary Fund and pro-market ‘Washington Consensus’ are familiar, but provide interesting explanations for the economic success of China when compared with India and Latin America.

In terms of prescriptions, Stiglitz’s rejection of both Smith’s ‘invisible hand’ and ‘trickle-down’ economics will appeal to those unconvinced by unfettered markets. Yet advocates of protectionism (such as American unions) also receive short shrift. Broadly, an attractive thesis emerges: governments must not shrink from ‘managing’ globalisation by various market interventions – but this does not mean sheltering domestic special interests from competition. Specifically, Stiglitz’s chapter on reforming national reserve systems will be of interest to economists, while his agenda for closing the ‘democratic deficit’ in global economic governance is more generally accessible. Some of the book’s other proposals may seem either under-developed (introducing a global competition authority) or politically unfeasible (forcing US action on climate change by trade sanctions).

Yet, regardless of whether we follow his advice, Stiglitz provides a provocative starting-point. This book offers a reminder of globalisation’s flaws and – perhaps more importantly – a sense that they are not necessarily beyond repair.