More Economic waffling

When I went to university it took me quite some time to get a hang of the archaeological terminology (and lots of it still baffles me), so I guess I shouldn´t expect to be a vocabulary expert when I plow through my new growing collection of literature on economic theory. I am leaving contextual seriation, morphology, isotopic analysis and paleopathology, in favour of fiscal austerity, aggregate demand and devaluation. Neither of the groups sound all that exciting now do they?

But even though I need to consult my dictionary now and then, and even though I would turn and leave as soon as someone tried to talk economics to me a few years ago, I´m finding this new topic surprisingly interesting. To the degree that I sometimes have to shout straight out or underline whole paragraphs.


I have just finished Globalization and its discontents by the former head of the World Bank and winner of the Nobel prize in economics Joseph Stiglitz (who of course gave a talk at the Hay-on Wye festival this year. Why is it that everyone went there this year when I was too ill to join in?). I´m not gonna dwell long on what the book is about, but it centres mostly on the International Monetary Fund (IMF) which was created after WWII to ensure global economic stability. Although it is a public institution, meant to serve the public, it is completely non-transparent and US holds the only veto. Those who hold high posts within the IMF are a pick from the US business community, and the minute they step down they re-emerge in to, for example Citigroup or other multinational corporations. As Stiglitz says, there is no doubt that the economic decisions affecting development countries all over the world, made by economists in Washington, are designed to firstly benefit Wall Street. In many cases of IMF involvement in development countries, it employs a narrow minded "cookie-cutter" approach, focused on privatization and capital liberalization meant to attract foreign investment, while ignoring social stability, market control and regulation, with disastrous results. The IMF has confused ends with means and are blindly forcing their ideology regardless of individual circumstances, and to this day they are very reluctant to admit to any wrong doing or will to change.

I was shocked to read that an institution with almost absolute power, can get away with so much incompetence, and cause, rather than resolve many development countries spiraling crises. It is so bad that the author argues that "today´s IMF has, in my judgement, not articulated a coherent theory of market failure that would justify its own existence and provide a rationale for its particular interventions in the market" (p.197).

Read it, I had problems putting it down.