I'm enjoying Joe Stiglitz's much-talked-about book, "Globalization and its discontents" and find myself very much in sympathy with his main argument -- that the IMF has imposed a one-size-fits-all set of conditions on all sorts of countries with entirely different problems.
As to his economic views generally, the following two paragraphs (pp73/74) summarise his position: <<<< Behind the free market ideology there is a model, often attributed to Adam Smith, which argues that market forces -- the profit motive -- drive the economy to efficient outcomes *as if by an invisible hand*. One of the great achievements of modern economics is to show the sense in which, and the conditions under which, Smith's conclusion is correct. It turns out that these conditions are highly restrictive. Indeed, more recent advances in economic theory -- ironically occurring precisely during the period of the most relentless pursuit of the Washington Cenonsensus politics -- have shown that whenever information is imperfect and market incomplete, which is to say always, *and especially in developing countries*, then the invisible hand works most imperfectly. Significantly, there are desirable governmental interventions which, in principle, can improve upon the efficiency of the market. These restrictions on the conditions under which markets result in efficiency are important -- many of the key activities of government can be understood as responses to the resulting market failures. If information were perfect. we know now, there would be little role for financial market regulation. If competition were automatically perfect, there would be no need for antitrust authorities. The Washington Consensus policies, however, were based on a simplistic model of the market economy, the competititve equilibrium model, in which Adam smith's invisible hand works, and works perfectly. Because in this model there is no need for government -- that is, free, unfettered, "liberal" markets work perfectly -- the Washington Consensus policies are sometimes referred to as "neo-liberal", based on "market fundamentalism," a resuscitation of the laissez-faire policies that were popular in some circles in the nineteenth century. In the afternmath of the Great Depression and the recognition of other failings of the market system, from massive inequality to unlivable cities marred by pollution and decay, these free market policies have been widely rejected in the more advanced industrial countries, though within these countries there remains an active debate about the appropriate balance between government and markets. >>>> I find myself agreeing with this statement and, as an apparent laissez-faire person, am feeling a little rueful about some of the things I have written on Futurework. However, Joe Stiglitz is writing from the point of view as an American, whereas I write as an English person in a country which is without a written constitution, has always had a highly secretive and elitist government, and is highly centralised. Thus our constitution is being invisibly and constantly modified in practice (usually by the establishment with few democratic inputs), we do not yet have legislation anywhere comparable to the US Freedom of Information Act, and our government still attempts to run huge managerial systems (health and education in particular -- with numbers of staff far larger than any multinational company) by means of directives from London -- and by civil servants who have little daily contact with either the staff at the coal face or the customers. (Diversion: as to the 'Big Two' systems in England, the situation is that both the National Health Service and the state Education system are now close to breaking point. The present Labour government are now making a last shot at improving them by injecting vast quantities of money and hoping for improvements by the time of the next election in three years.) So that's where I come from, and many of the comments I've made on FW in the past don't necessarily have relevance to other countries. However, I feel gratified that one of the themes that I've been concentrating on in recent months -- transparency of information -- is something that Stiglitz also gives great importance to. It isn't the fact of greedy or criminal or monopolistic businessmen that's the problem -- such people are to be found in all walks of life -- it's the degree to which politicians (who are supposed to be acting on our behalf) become corrupted and secretly conspire to give special privileges to a few. Keith Hudson ---------------------------------------------------------------------------- ------------ Keith Hudson, General Editor, Handlo Music, http://www.handlo.com 6 Upper Camden Place, Bath BA1 5HX, England Tel: +44 1225 312622; Fax: +44 1225 447727; mailto:[EMAIL PROTECTED] ________________________________________________________________________
