Stiglitz: WB traitor?
Has anyone seen the January 1998 paper by Joe Stiglitz upending the Washington Consensus? (The speech in Finland that, tellingly, isn't on the World Bank homepage.) In South Africa, the WB mission maintains a hard neo-lib edge. Several of us here are wondering whether the merits of his modified Keynesian approach bear any merit, in the various ideological struggles. For example, Robert Lucas penned a World Bank paper on wages and unemployment predictably blaming the unions for the positive correlation, and yesterday much of that analysis was carried through in a presentation to the corporatist bargaining forum by a WB hack. Macroeconomics here continues to be austerity-oriented, with the WB mission playing cheerleader. Does Stiglitz merit attention? I'll send the paper in three parts... (footnotes, refs and tables are evacuated...) Thanks, Patrick
Re: (Fwd) Re: [Fwd: Stiglitz: WB traitor?]
MORE INSTRUMENTS AND BROADER GOALS: Moving Toward the Post-Washington Consensus Joseph Stiglitz, Senior Vice President and Chief Economist The World Bank January 7, 1998 The 1998 WIDER Annual Lecture (Helsinki, Finland) Today I would like to discuss improvements in our understanding of economic development. In particular, I would like to use my lecture today to discuss the emergence of what is sometimes called the "Post-Washington Consensus". My remarks elaborate two themes. The first theme is that we have come to a better understanding of what makes markets work better. The Washington Consensus held that good economic performance required liberalized trade, macroeconomic stability, and getting prices right. Once the government handled these issues - essentially, once the government "got out of the way" - private markets would produce efficient allocations and growth. To be sure, all of these are important for markets to work. It is very difficult for investors to make good decisions when inflation is running at 100 percent annually. But the policies advanced by the Washington Consensus are hardly complete and sometimes misguided. Making markets work requires more than just low inflation, it requires sound financial regulation, competition policy, and policies to facilitate the transfer of technology, and transparency, to name some fundamental issues neglected by the Washington Consensus. At the same time that we have improved our understanding of the instruments to promote well-functioning markets, we have broadened the objectives of development to include other goals like sustainable development, egalitarian development, and democratic development. An important part of development today is seeking complementary strategies that advance these goals simultaneously. In our search for these policies, however, we should not ignore the inevitable tradeoffs. This will be the second theme of my remarks today. SOME LESSONS OF THE EAST ASIAN FINANCIAL CRISIS Before discussing my two themes, I would like to address at the outset one issue that is on many people's minds: the implications of the East Asian crisis for our thinking about development. The observation of the successful, some even say miraculous, East Asian development was one of the motivations for moving beyond the Washington Consensus. After all, here was a regional cluster of countries that had not closely followed the Washington Consensus prescriptions but had somehow managed the most successful development in history. To be sure many of their policies - like low inflation and fiscal prudence - were perfectly in line with the Washington Consensus. But many, especially in the financial sector, were not. This observation was the basis for the World Bank's East Asian Miracle study (World Bank 1993) as well as a stimulus for the recent rethinking of the role of the state in economic development. Following the financial crisis, the East Asian economies have gone from being cited for their remarkable success in development to being widely condemned for the mess they find themselves in today. Some ideologues have taken advantage of the current problems besetting East Asia to suggest that the system of active state intervention is the root of the problem. They refer to the government directed loans and the cozy relations with the large chaebol in Korea. In doing so, they forget the not inconsiderable successes of the past three decades; to which the government, despite its occasional mistakes, has certainly contributed. These achievements are real, they are not a house of cards. No temporary financial turmoil can or should detract from these achievements, which include not only large increases in per capita GDP, but also extended life spans, widespread education, and dramatically reduced poverty. Even when the governments directly undertook actions themselves, they had notable achievements: they created the most efficient steel plants, contrary to privatization ideologues who suggested that such successes are at best a fluke and at worst impossible. I agree that government should focus on what it alone can do, and it should leave the production of commodities like steel to the private sector. But I will argue that the heart of the current problem in most cases is not that government has done too much, but that it has done too little. In Thailand, it was not that government directed the investments into real estate; it was that government regulators failed to halt it. Similarly, in Korea there was a big problem of lending to companies with excessively high leverage as well as corporate governance issues that include widespread cross=subsidization. The fault is not that the government misdirected credit - in fact the problems faced by many US, European and Japanese banks suggest that they also may have seriously misdirected credit. Instead the problem was the government's
Re: (Fwd) Re: [Fwd: Stiglitz: WB traitor?]#2
--- Forwarded Message Follows --- Financial Reform The importance of building robust financial systems goes beyond simply averting economic crises. I have sometimes likened the financial system to the "brain" of the economy. It plays an important role in collecting and aggravating savings from agents who have excess resources today. These resources are allocated to others - like entrepreneurs and home builders - who can make productive use of those resources. Well-functioning financial systems do a very good job of selecting the most productive recipients for these resources. In contrast, poorly-functioning financial systems will often allocate capital to low-productivity investments. Selecting projects is only the first stage. The financial system needs to continue to monitor the use of funds, ensuring that they are continuing to be used productively. In the process, they serve a number of other functions, including reducing risk, increasing liquidity, and conveying information. All of these functions are essential to both the growth of capital and the increase in total factor productivity. Left to themselves, financial systems will not do a very good job in fulfilling these functions. These most important lesson of the theory and observation of financial markets is the pervasiveness of market failure. Incomplete information, incomplete markets, and incomplete contracts are all particularly severe in the financial sector, resulting in an equilibrium that is not even constrained Pareto efficient (Greenwald and Stiglitz 1986). A sound legal framework combined with regulation and oversight is necessary to mitigate these informational problems and foster the conditions for efficient financial markets. In successful financial markets, regulations serve four purposes: maintaining safety and soundness (prudential regulation), promoting competition, protecting consumers, and ensuring that undeserved groups have some access to capital. In many cases, the pursuit of social objectives - like ensuring a supply of funds to minorities and poor communities, as under the United States' Community Reinvestment Act - or ensuring a supply of funds for mortgages, the essential mission of the government created Federal National Mortgage Association - or ensuring a supply of funds for small businesses, the central objective in the United States of the Small Business Administration - can, if done well, reinforce economic objectives. Similarly, protecting consumers is not only good fiscal policy, but without confidence that there is a "level playing field" in economic markets, those markets will remain thin and ineffective. There are times, however, when policy makers might face tradeoffs among conflicting objectives. For instance, the Est Asian countries adopted financial restraints. These restraints increased the franchise values of banks, discouraging them from taking unwarranted risks that otherwise might have destabilized the banking sector. Although there were undoubtedly some economic costs associated with these restraints, the gains from greater stability almost surely outweighed these losses. Previous efforts by the World Bank and others have tried to build better banking systems. In practice, however, the changing including institutional development, changes in credit culture, and moral hazard have all proven more intractable and harder to make progress on than short-term solutions like recapitalizing the banking system. In the worst cases these temporary fixes may even have undermined pressures for further reform. And since the fundamental problems were not addressed, we would sometimes find ourselves returning to the same countries over and over again. The Washington Consensus developed in a context of highly regulated financial systems, while many of the regulations were designed to limit competition, not to promote of the four legitimate objectives of regulation. But all too often the dogma of liberalization became an end in itself not a means to a better financial system. I do not have time to delve into all of the many facets of liberalization, which include freeing up deposit and lending rates, opening up to foreign banks, removing restrictions from capital account transactions, and removing restrictions on bank lending. But I do want to make a few general points. First, the key issue would not be liberalization or deregulation, but the construction of the regulatory framework which ensures an effective financial system. This will require, in many countries, changing the regulatory framework, eliminating regulations which serve only to restrict competition and prudential behavior (and to ensure that banks have appropriate incentives). Second, even once the design of the desired financial system is in place, due care will have to be exercised in the transaction. The attempt to initiate overnight deregulation, sometimes known as
Re: globaloney
Doug writes: There are abstractions that clarify and those that obscure. "Globalization" is a way to talk about capitalism and imperialism without having to use those words. It relieves liberals and NGO types of the pain of uttering those embarrassing -ism words, and apologists like the word because it naturalizes social processes and drains them of agency. Maybe I miss the context because I don't know any NGO types. The big problem is those who see globalization as meaning that domestic politics have absolutely no effect, denying the relative autonomy of the nation-state. To me, globalization is the process of the establishment of what Ross and Tracte termed "global capitalism," the stage after what they call "monopoly capitalism" (and I would call (for the US) "state-guided corporate capitalism," an admittedly clumsy term). Maybe it should be called the "new global capitalism" to distinguish it from the 19th century era of UK-centric globalism. But then again, most people forget to add the word "new" to the word "Imperialism" when describing the late 19th century (distinguishing it from Roman imperialism, etc.) It's often surreal to hear Americans talk about globalization - a country that was founded on a massive act of transnational appropriation, whose early growth was funded by London finance, and which has run riot over the outside world for a century. Yeah, but from the Civil War until the aftermath of the 1930s Great Depression, the US economy operated behind high protectionist walls and industry mostly served domestic markets. To some extent (and for US-based thinkers) globalization is defined _relative to_ that era and the era after WW2 when US industry ruled the global roost because Germany Japan had been wiped out (and because S. Korea etc. hadn't arisen as industrial powers). Of course, it was during the latter period that the US-led drive to create a new global economy got into full gear (at Bretton Woods, etc.) in pen-l solidarity, Jim Devine [EMAIL PROTECTED] http://clawww.lmu.edu/1997F/ECON/jdevine.html Naming the Washington National Airport after Ronald Reagan is "like naming an organ-donor bank after Jeffrey Dahmer." -- Will Durst.
Re: globaloney
Doug Henwood wrote: It's often surreal to hear Americans talk about globalization - a country that was founded on a massive act of transnational appropriation, whose early growth was funded by London finance, and which has run riot over the outside world for a century. Don't forget the enormous lift that the U.S. got when many states declared bankruptcy in the 1840s, cancelling much of the British debt. Scrouge dreamt in one of his nightmares that he was holding U.S. bonds. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: globaloney
It is the politics of most 'globalization' talk that is the problem. Evading the cardinal difference between 'globalizer' and 'globalized' countries. Populist not socialist opposition to market domination. Relying on capitalist states (protectionism). Bill Burgess ([EMAIL PROTECTED]) Department of Geography, Tel: (604) 822-2663 University of British Columbia, B.C. Fax: (604) 822-6150
Re: Labor Movement Growth Decline
Maggie, I reread your comments to which I responded, and read my whole response (rather than the two introductory sentences you quote below) in context. I'm not sure what you found patronizing. You had said: During the height of union organizing in the US following the Civil War and again pre and post WWII in the USA, there was a highly charged political atmosphere with MANY groups with variations of the same message -- working class solidarity and the need to organize. The same type of atmosphere led to many of the successful organizing tactics in civil right, vietnam war and the women's movement of the 60s/70s. How does one begin to create such an atmosphere? My response (in context) was intended to make the point that in the moment it is not always possible to see from within the framework of individual struggles the potential cumulative effect of struggles under way or trajectory of a social movement. My response to the question you posed was that the atmosphere is a product of lots of separate battles and the best guarantor of creating the kind of political atmosphere you say is needed is to initiate and support more of these kinds of struggles, which taken together can strengthen the most democratic and progressive tendencies within the movement and create the critical mass needed to shift mass politics dramatically. When I engaged in my first anti-Vietnam protest or civil rights action in the very early 1960s, I could not foresee where those actions would lead or what role they would play in the creation of a larger movement. I doubt that the UPS strikers understood or foresaw the larger ramifications of that struggle while they were on the picketlines. Yet the ramifications and impact of that strike for the rest of the labor movement were far more profound than the strike and settlement itself might otherwise suggest when examined as a single battle. Again, my apologies if I made the point awkwardly or in a manner that was offensive to you. In solidarity, Michael At 05:55 AM 4/4/98 EST, MScoleman wrote: In a message dated 98-04-03 00:05:46 EST, Michael Eischner writes: The movements you refer to did not spring into life fully developed, but rather were created out of an accumulation of struggles (many that ended in defeat) over a protracted period of time. In other words, this was an extended process that finally reached critical mass. no kidding. I don't mind debating people, but I do mind patronizing comments. [EMAIL PROTECTED]
Re: (Fwd) Re: [Fwd: Stiglitz: WB traitor?]
Many thanks to Patrick Bond for posting the speech by Stiglitz. It's an important read, I think. There's a lot off good stuff here, as well as a lot of not-so-good stuff. (Naturally, I was a bit irritated to read his account at the end of the tradeoff between environmental quality and popular participation. I have a different take.) Many of Stiglitz' thoughts on the finance would be applicable, I think, to a socialist financial system. Incidentally, it was rather cheeky of Stiglitz to refer to his ideas as a "consensus". The Washington Consensus gets its name from the unanimity of the people who mattered. (It didn't matter that you and I weren't on board.) The Stiglitz program would be endorsed today by only a minority of the people who matter. Is it possible to get a copy of the whole thing, complete with tables and citations? And without the Marxo-Freudian slips of Patrick's trusty OCR? "I have sometimes likened the financial system to the "brain" of the economy. It plays an important role in collecting and aggravating savings from agents who have excess resources today." Peter Dorman
globaloney
Jim writes to the effect that US corporations only served the US market up to the 1930s. I suggest he look at Mira Wilkins work on the MNC. American corporations began to invade Canada in the last decade of the 19th C. (See also Southard et al., Canadian American Business which was, if I remember correctly, was published in the 1930s.) The move into Canada was, in my opinion, an offshoot of the trust and merger movement. Having reached the limit of the US market, the new corporattions could only achieve a larger market by expanding to other countries. Given the communication and transportation limitations of the day, the most availble market was Canada and this was the period when the first major wave of foreign direct investment occured in Canada. Paul Phillips, Economics, University of Manitoba
Re: globaloney
In the early 1970's, productivity growth dropped in the U.S., well before most of the talk of globalization. This trend can explain much of subsequent U.S. political economy without need for reference to globalization or universalization of the market: the need to reduce wage growth, attack unions, cut public spending, etc. Two possible causes of this change are the fall-off in public investment, and the process of suburbanization, but I'm not all that impressed with these explanations. I wonder if there are more radical ones. As a side note, Bill Burgess wrote: It is the politics of most 'globalization' talk that is the problem. Evading the cardinal difference between 'globalizer' and 'globalized' countries. Populist not socialist opposition to market domination. Relying on capitalist states (protectionism). This cuts two ways, or maybe four ways. Many socialists have made reference to national liberation and an implied distinction between national capitalists (sic) and the foreigners, and populists attack 'big' local capitalists as extensions of the rotten foreign ones, or as part of a supranational capitalist class. You could say the populist gambit is opportunistic because all capitalists are supranational, or anational, in nature, or you could see it as a useful pedagogical device to illuminate the inherent amorality of Capital. Of course, maybe the socialists were really populists, and the populists were really socialists. MBS == Max B. Sawicky Economic Policy Institute [EMAIL PROTECTED] Suite 1200 202-775-8810 (voice) 1660 L Street, NW 202-775-0819 (fax) Washington, DC 20036 Opinions here do not necessarily represent the views of anyone associated with the Economic Policy Institute. ===
Re: globaloney-stripazation
On Sat, 4 Apr 1998, James Devine wrote: One way of reconciling the titanic globalization vs. stripazation debate that's brewing is to suggest that the strip-mining of the world is becoming generalized. Capitalist strip-mining of the world also takes place in the core (e.g., in South Central L.A.), not just in the periphery. It doesn't take place where the people have political/economic clout and fight back. White folks in the suburbs or gentrified neighborhoods in the rich countries are more able to resist stripazation. Stripazation seems a bit unwieldy. How about global primitive accumulation? I.e. all those raw materials and low-tech commodities being pumped out of the global peripheries using the latest production and refining technology, and transported and marketed by giant media and marketing multinationals? This then ties back into things like the $2.3 trillion mountain of Third World debt, which is basically the shotgun pointed at the head of 4 billion human beings on this planet, telling them to slave away for the multis or eat credit death. We definitely need a whole new descriptive and analytical language to decode the current state of the world-system. South Korea's debt, for example, might have to be classified as a form of neo-national finance capital tied to multinational export-platform accumulation (I'm just throwing out these terms as fanciful suggestions, not as received fonts of wisdom). The Goddess only knows what to make of Dow 9000. Bubble accumulation? -- Dennis
Re: A Right-wing ballot initiative
At 06:59 AM 4/3/98 -0800, R. Anders Schneiderman wrote: I'm glad to hear that things are really looking up in the Bay Area, but I was talking more about statewide action, where the big money gets spent. On the last couple statewide initiatives where I volunteered, I heard a lot of complaining about how stupidly statewide union money was being squandered. This was particularly true in the anti-CCRI fight, where a number of folks running the grassroots GOTV were pretty angry by the end as to how little money got spent and where it got spent (this didn't mean that invidual locals weren't terrific; in the Bay Area, for ex, the kick-ass folks at HERE2850 turned over their phones for phone banking did a lot to make a real difference). I agree with your description of the State operation. It is being demonstrated once again in how 226 is being dealt with. Incidentally, when you say there's been a real shift in the Bay Area, does that mean that SEIU 250 and CNA are no longer trying to cut each others throats (e.g., stupid personal rivalries between the leaders of the two that blew the statewide initiatives on health care rights)? While CNA now has a contract, the relationship between the leaders of the two organizers remains unfriendly. For most of the members, this dispute has not been a core issue as they work side by side and on the whole don't feel the emnity that Sal and Rose Ann do toward one another. There are staff members in both organizations who were very upset with the course their respective unions took and did there best to insulate their members from the dirty propaganda war. CNA is now exploring an affiliation agreement with the UAW (according to what I hear, although not confirmed). While Sal and Rose Ann were the immediate combatants, the national leadership of SEIU had a big hand in stirring the pot. They're eager to organize wall-to-wall in healthcare. There is also no assurance that labor leaders would conclude as a consequence of 226's passage that base-building is the way to go. They might just as easily conclude they need bigger media budgets. You're right; but I think they're smart enough--or, more importantly, their rank-and-filers are smart enough--that if it actually passes, they'll realize they don't have a choice (I could be wrong, which is why I hope we don't get to find out). Unfortunately most rank and filers don't understand 226. Polling numbers show that if a vote were taken today over 60% of union members would vote for it. In focus groups after an hour or more discussion, members recognize how it is designed to weaken the labor movement, but I know of no plan by which all the union members in the state will spend 90 minutes in focus groups learning about its sinister design, not to mention that union voters are a minority of all voters. I don't really want to see 226 pass, but the cynical, burned-out part of me wonders whether unions will change fast enough to survive if they don't get a shock to the system. Unions have changed a huge amount in the last few years, but change is still happening at an incredibly slow rate. I understand why; I've been active in two locals and appreciate how hard it is to change the way folks are used to operating. But unless unions can manage to move even faster, it's hard for me to see how our side has any chance. I think the only hope our side has is from unions: they're the only player who have a ton of money that comes from us dues-paying members and not from a foundation. And that makes me very, very scared for our future. While I don't dispute your evaluation of the pace of change, and would go further to critique the depth of change that is occurring, I don't think the solution is a "shock to the system" from passage of 226. A right-to-work law will follow as night follows day and the unions won't have the economic resources to fight it. It will more likely accelerate the downward spiral even if it does awaken some leaders to the need for member involvement. See my article in the latest issue of WorkingUSA for an alternative approach. In solidarity, Michael
Re: globaloney-stripazation
In a message dated 98-04-04 11:34:11 EST, Jim Devine writes: BTW, for the life of me, I can't remember talking about "evening out" or being snapped at for it. But that simply indicates the bizarre nature of my brain processes. Aha! We could call that synapization-a-snappa. (snicker) maggie [EMAIL PROTECTED]
Re: Labor Movement Growth Decline
In a message dated 98-04-04 13:35:50 EST, you write: I reread your comments to which I responded, and read my whole response (rather than the two introductory sentences you quote below) in context. I'm not sure what you found patronizing. Michael Eischner, It is possible I over reacted -- and I don't disagree with any of your points, they are certainly good ones. peace, maggie coleman [EMAIL PROTECTED]
Re: globaloney
Both Doug and Maggie are correct. The Brits early on invested in Latin American bonds. When they defaulted, the Brits turned to the U.S. and invested in the great Canal Boom of the 1820s, and continued to do so through the enormous expansion of the rail roads. MScoleman wrote: In a message dated 98-04-04 11:51:11 EST, Doug Henwood writes: It's often surreal to hear Americans talk about globalization - a country that was founded on a massive act of transnational appropriation, whose early growth was funded by London finance, and which has run riot over the outside world for a century. Actually, it was my understanding that the earliest industrial base in New England was built with three forms of capital: profits from southern plantation owners, profits from Boston and New York Merchant houses, and state capital. For instance, Massachusetts invested over $6,000,000 in Lowell to get it going. Mainly this local investment was because of the war -- the one we all tend to forget -- the War of 1812 where the Brits burned Washington. The London investments came a couple or three decades later and they invested first in Pennsylvania oil, and a little later in railroads. (not that I disagree with your basic point at all) maggie coleman [EMAIL PROTECTED] -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: (Fwd) Re: [Fwd: Stiglitz: WB traitor?]
I have not read enough of and about Stiglitz but the very fact he was addressing WIDER in Helsinki should give us a clue (a deduction of sorts from the subject header). WIDER is peopled by the left of all stripes but certainly quite left if Washingtonians are concerned (exclude me I live in the other Washington among other places!). And it is a United Nations University entity. It is one of those places where Cartesian rationality is shredded to pieces! Several excellent publications have come out: I can think of Marglin and Marglin, Colcough, Ajit Singh, Schor, Dreze and Sen, Banuri, etc. It was headed (I do not know at this time who) by a Sri Lankan. Thus it is not surprising what Stiglitz had to say. Any reasonable person irrespective of ideology presumably recognizes the importance of institutions in the development process and the state is one such v. important institution. Virtually all my work addresses this issue. Unfortunately I carry the passport of a country whose government has been designed as a well-meaning institution but performs precisely in ways that Reagan would have sermoned about! Being dubbed a traitor must imply that Stiglitz held another position. I am not in a position to evaluate that. Cheers, Anthony D'Costa
Re: Russia - Falling Wages
From: Tom Condit [EMAIL PROTECTED] (by way of Michael Eisenscher [EMAIL PROTECTED]) Subject: Russia: Falling wages Berkeley, Calif., April 1, 1998 -- Two University of California at Berkeley sociologists have discovered that after adjusting for inflation, real wages have declined by 50 percent following the fall of communism. Michael Hout, a UC Berkeley sociology professor, along with former UC Berkeley graduate student Theodore Gerber, found that the lower wages result from Russia's widespread economic regression and affects citizens from all sectors of society in the country. Gerber and Hout have released their data along with an analysis of a survey conducted from 1991-96. The survey shows that unemployment increased from 1.1 percent in 1991 to 13 percent in 1996, reaching 22 percent among those between the ages of 18 and 25. Hout said in a statement that the survey's results reflect a loss in the gross domestic product of 33 percent -- a loss that is greater than the 27 percent GDP loss durign the Great Depression of 1933. The two scholars' report is published in the upcoming July issue of the American Journal of Sociology. --The Daily Californian, April 1, 1998
World Watch Institute Lester Brown Endorses Anti-Immigrant Measure in Sierra Club vote
It is with sadness that I read in today's NEW YORK TIMES that the World Watch Institute, which has often done good studies on hunger and poverty in the world, just had its executive director Lester Brown endorse the anti-immmigrant measure currently being voted on within the Sierra Club. Anti-immigrant groups have pushed the measure, calling for a moratorium on immigration as an "environmental" measure, against the will of most current Sierra Club leadership. The measure of course ignores the fact that restricting immigration does nothing to help the overall global environment, since it merely traps expanding population in poverty in the third world (where population growth is larger). It is truly tragic that a man like Lester Brown who documents the poverty and hunger in the third world would advocate trapping more people there behind an Iron Curtain at the Rio Grande. --Nathan Newman
Re: globaloney
In a message dated 98-04-04 11:51:11 EST, Doug Henwood writes: It's often surreal to hear Americans talk about globalization - a country that was founded on a massive act of transnational appropriation, whose early growth was funded by London finance, and which has run riot over the outside world for a century. Actually, it was my understanding that the earliest industrial base in New England was built with three forms of capital: profits from southern plantation owners, profits from Boston and New York Merchant houses, and state capital. For instance, Massachusetts invested over $6,000,000 in Lowell to get it going. Mainly this local investment was because of the war -- the one we all tend to forget -- the War of 1812 where the Brits burned Washington. The London investments came a couple or three decades later and they invested first in Pennsylvania oil, and a little later in railroads. (not that I disagree with your basic point at all) maggie coleman [EMAIL PROTECTED]
Re: Stiglitz: WB traitor?
Maybe I missed something, but this speech seems consistent with the World Bank's traditional role as good cop to the IMF's bad cop. When Stiglitz says that "we do not have all the answers" he may provide a rhetorical opening for alternatives. He also acknowledges a number of critiques that people like Lance Taylor have been making for years. But his acknowledged lack of answers is basically in how to attain the neoliberal goal, not on what goals are appropriate. So he's only directly useful if you want to advocate a slightly more social-democratic variety of neoliberalism. Note that while Stiglitz deplores unemployment his apparent solution is better financial regulation. I'm not sure what Patrick meant when he wrote of Stiglitz' "modified Keynesian approach." The only real iconoclasm I saw was the questioning of dogma about privatization -- in the past it was assumed to be so intrinsically good that the World Bank would assess the success of privatization by how much of it took place (see the 1991 WDR). Best, Colin
Re: globaloney
maxsaw wrote: In the early 1970's, productivity growth dropped in the U.S., well before most of the talk of globalization. This trend can explain much of subsequent U.S. political economy without need for reference to globalization or universalization of the market: the need to reduce wage growth, attack unions, cut public spending, etc. The better answer is that the previous period was exceptional. I suspect that the reason includes the spin offs from the intensive scientific efforts associated with WW II. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: globaloney-stripazation
Perhaps globalization is a "fact" or perhaps not. In either case, the discourse of "globalization" is being used by firms to legitimate changes within the firm and in socieity that they desire which are not strictly related to "the demands of globalization." CEOs can't say to workers, "I'm laying you off because this will increase my profit" but they can say, "in this increasingly globalized economy, firms must achieve cost efficiencies where ever they can find them." The discourse of globalization is being used to crowd out other discourses, such as those based on fairness, justice, social responsiblity, democracy, and so on. Eric .. Eric Nilsson Economics Department CSUSB San Bernardino, CA 92407 [EMAIL PROTECTED] 909-880-5564
Re: globaloney
At 01:59 p.m. 4/4/98 -0600, Paul Phillips wrote: Jim writes to the effect that US corporations only served the US market up to the 1930s. I suggest he look at Mira Wilkins work on the MNC. American corporations began to invade Canada in the last decade of the 19th C. yeah, I can think of other cases. But I don't see these as knocking down what I said. Rather, it makes me make it clearer what I was trying to say: in the 19th C. (or rather from about 1860 until about 1950), the US industry _mostly_ focussed on serving the domestic market, as protection kept most British competition (but not investment) out. With this nice safe haven, they could storm the rest of the world with goods (if they could compete) or with investment. They started with neighbors like Canada and Mexico. Jim Devine [EMAIL PROTECTED] http://clawww.lmu.edu/1997F/ECON/jdevine.html Naming the Washington National Airport after Ronald Reagan is "like naming an organ-donor bank after Jeffrey Dahmer." -- Will Durst.
Re: low-wage workers in less-developed countries
To whom, Just a stickle, but I object to the term "brain drain" when in fact we mean "education drain", because it plays in to the myth of the meritocracy. There are plenty of people who can do computer programming, God knows, but there are not many who have been provided the education. If Western governments get their way, there will be even fewer as they are beginning to compete to draw well-educated foreigners into their high-tech industries. Of course in this way increased education investment in the First World becomes unnecessary and the benefit of education investment to the rest of the world vanishes. peace
Re: globaloney-stripazation
To whom..., It may not be that the third world is industrializing in the way we know it, but the economies are changing in some of the ways industrial economies change. People are leaving (or being forced off) subsistence agriculture because it is no longer viable in what is increasingly a true money economy. The problem is that import-substitution industry which may be cheaper to develop, does not encourage the money economy. Export industry is either too expensive to develop locally or it is simply there to take advantage low wages and is not integrated into the local economy, thereby becoming super-exploitative. peace
Re: low-wage workers in less-developed countries
5. A US sw engineer earning $60-70,000 a year will earn about $25-30,000 in India. But when you factor in cost of living, taxes, club membership, and social connections, and the like most Indian managers in this bracket would prefer to live in India. 6. Labor turnover in the Indian sw industry is very high (relatively): roughly 17%. Most leave for the US after a couple of years work. There is a massive shortage of sw professionals in the advanced capitalist economies and shortages are beginning to show up in India. Anthony, the massive shortage of software workers is a fiction. Companies prefer to hire young people and foreigners, who accept less money. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: globaloney-stripazation
Louis writes: I snapped at Jim Devine a couple of months ago (sorry, Jim) for stating that there is some kind of "evening out" process taking place globally. The truth is that Guatemala is not rising up. The number of people living in povery in 1980 was 80%; in 1990 it was 87%. I can believe it, though measurement of poverty is an especially iffy thing (even in the US, which has more and better data). It's been more than two decades than I visited Guatemala, but I would guess that the "evening out" process would involve only the societal elite (and those who want to join that elite, like the merchant I met near Lago de Atitlan). Like the Mexico City rich who fly up to Houston to go shopping and are abandoning Spanish except to speak to the servants. I would also guess that the Guatemalan rich would do everything they could to link their homeland to the world economy and to unite with the rich in the US, Mexico, etc. The move toward globalization doesn't just come from the World Bank and neo-lib economists. A lot of early Marxists (including, if I remember correctly, Marx Engels in the MANIFESTO) saw the globalization of capitalism as automatically abolishing pre-capitalist modes of production. But recent research indicates that when relations of merchant capital (an incomplete form of capitalism) dominate, it leads to the persistence of pre-capitalist modes that extort surplus-labor that can be commodified. The abolition of pre-capitalist modes is not automatic; in England, it involved a bloody process of "primitive accumulation." I can see how Mariategui (sp?) and others (Trotsky, Marx himself at one stage, when he coined the phrase permanent revolution) could point to the cowardice of the bourgeoisie. Abolishing old modes can unleash all sorts of struggles, both between the old ruling class and the new, and more dangerously, from below. So we can see globalization with persistence of old modes. Again, we have to make it clear what we mean by "globalization" or whatever word we want to use instead. One way of reconciling the titanic globalization vs. stripazation debate that's brewing is to suggest that the strip-mining of the world is becoming generalized. Capitalist strip-mining of the world also takes place in the core (e.g., in South Central L.A.), not just in the periphery. It doesn't take place where the people have political/economic clout and fight back. White folks in the suburbs or gentrified neighborhoods in the rich countries are more able to resist stripazation. BTW, for the life of me, I can't remember talking about "evening out" or being snapped at for it. But that simply indicates the bizarre nature of my brain processes. in pen-l solidarity, Jim Devine [EMAIL PROTECTED] http://clawww.lmu.edu/1997F/ECON/jdevine.html Naming the Washington National Airport after Ronald Reagan is "like naming an organ-donor bank after Jeffrey Dahmer." -- Will Durst.
Re: low-wage workers in less-developed countries
So far my research on the Indian software (sw) industry reveals the following: 1. low wages (salaries) are important for MNC location. 2. quality of workforce (skill-wise) is equally important. 3. command over the English language is very important. 4. Indian sw industry salaries are increasing at 20% per annum compared to US rates of about 10%. Absolute salary differentials are still massive but within the Indian context very high. 5. A US sw engineer earning $60-70,000 a year will earn about $25-30,000 in India. But when you factor in cost of living, taxes, club membership, and social connections, and the like most Indian managers in this bracket would prefer to live in India. 6. Labor turnover in the Indian sw industry is very high (relatively): roughly 17%. Most leave for the US after a couple of years work. There is a massive shortage of sw professionals in the advanced capitalist economies and shortages are beginning to show up in India. 7. The Indian government at various levels is planning for new IT institutes patterned after the successful Indian Institutes of Technology. Private firms are providing basic training. 8. Previous "brain drain" from India seems to be now working in India's favor. 9. The Indian industry still piggy backs on services for mainly US clients with little intellectual property rights retained in India. This will remain for a while until the domestic Industry generates home demand. 10. India has had the most insulated economy for a long time with a trade ratio coming close to North Korea's:) but the sw industry is an anomaly of sorts with about 60% exports! More to follow Cheers, Anthony
Re: globaloney
James Devine wrote: So the term "globalization" obscures more than it reveals? Yup. The fact is that "globalization" is an abstraction. All abstractions simplify -- i.e., distort, obscure -- reality. We hope that they also reveal more than they obscure, which is why we insist on clear, coherent, abstractions, ones that don't abstract from the empirically important aspects of life. The problem is that such abstractions are a necessary part of understanding the world. There are abstractions that clarify and those that obscure. "Globalization" is a way to talk about capitalism and imperialism without having to use those words. It relieves liberals and NGO types of the pain of uttering those embarrassing -ism words, and apologists like the word because it naturalizes social processes and drains them of agency. It's often surreal to hear Americans talk about globalization - a country that was founded on a massive act of transnational appropriation, whose early growth was funded by London finance, and which has run riot over the outside world for a century. So speaking of "globalization" effaces this entire history and treats the internationalization of economic life as if it were a recent innovation. One alternative (one that I like more and more) is that that "globalization" is just one part of the larger trend of the development of the "Universal Market" (to use Harry Braverman's phrase), a development which is partly the result of the neo-liberal campaign, which itself is simply a form of class struggle by the capitalists. (Part of globalization is the development of a world capitalist class, BTW, with more and more of a unified program, neo-liberalism.) Absent serious opposition from the good folks, in the limit this trend is toward market totalitarianism. Under that system we'll all _volunteer_ to have swoosh tattoos. (This is very much in the tradition of the Frankfurt School or Marcuse, without the assumption of inevitabilty. It also allows the use of the word "globalization" to make things more understandable.) I agree with everything you say in this paragraph. These are the kind of points that should be made, but just invoking globalization doesn't say them. Doug
[Fwd: Stiglitz: WB traitor?] #3
--- Forwarded Message Follows --- Government as a Complement to Markets So far I have been discussing the ways in which the Washington Consensus on the issues of macroeconomic stabilization, financial reform, liberalized trade, and privatization, was insufficient. It contained important elements but in many ways does not go far enough in promoting issues like financial sector reform and competition policy. The next issues I am going to discuss are vital questions that the Washington Consensus did not even address ( or underemphasized). The first set of issues concern what the government should do and the second how it can what it does more effectively. For much of this century people have looked to government to do more - spend more and intervene more. Government spending as a share of GDP has grown with these demands. The Washington Consensus policies I have discussed were based on a rejection of the state's activist role and the promotion of a minimalist, non-interventionist state. The unspoken premise is that governments are presumed to be worse than markets. Therefore the smaller the state the better (i.e. less bad) the state. As should be clear from my remarks, I do not believe in blanket statements like "government is worse than markets". I have argued that government has an important role in responding market failures, which are a general feature of any economy with imperfect information and incomplete markets. The implication of this view is that the task of making the sate more effective is considerably more complex than just shrinking its size. Typically the state is involved in too many things, in an unfocused manner and as a result is less effective than it might be. The success of an organization depends on focus. Trying to get government better focused on the fundamentals - economic policies, basic education, health, roads, law and order, environmental protection - is a vital step. But focusing on the fundamentals is not a recipe for minimalist government. The state has an important role to play in appropriate regulation, industrial policy, social protection and welfare. The choice should not be whether the state should or should not be involved. Instead, it is often a matter of how it gets involved. More importantly, we should not see the state and market as substitutes. I would like to argue that the government should see itself as a complement to markets, undertaking those actions that make markets fulfill their functions better - as well as correcting market failures. We have already discussed one important instance, in the financial sector, where, without appropriate government regulations, the sector simply does not function well (see also Stiglitz 1993). Countries with successful economies also have governments that are involved in a range of other activities. In some cases, an argument can be made that the government has proven to be an effective catalyst - its actions help solve the problem of undersupply of (social) innovation. But once it has performed its catalyst role, it needs to withdraw. Thus, in the United States, the government established a national mortgage system, which has lowered borrowing costs and made available mortgages to millions of Americans - leading to one of the highest home ownership rates in the world. But having done this, it may be time for this activity to be turned over to the private sector. In the limited amount of time available today, I cannot review all, or even the most important areas in which government can serve as an important complement to markets. I shall discuss briefly only two, one in which there is little disagreement about the paramount role of government, but in the other of which attracts less attention. Human capital The role of human capital in economic growth has long bee appreciated. Studies have found that the returns to an additional year of education in the United States, for instance, are between 5 and 15 percent. Growth accounting also attributes a substantial portion of growth in developing countries to human capital accumulation. The East Asian economies, for instance, emphasized the role of government in providing universal education, which was a necessary part of their transformation from agrarian to rapidly industrializing economies. Left to itself, the market will tend to under provide human capital. It is very difficult to borrow against the prospects of future earnings since human capital itself is not collaterizable. These difficulties are especially severe for less wealthy families. The government plays an important role in providing public education, using other methods to make education more affordable and enhancing access to funding. The transfer of technology Studies of the returns to research and development in industrial countries have consistently found individual returns in the range of 20 to 30 percent and social
Re: globaloney-stripazation
At 06:13 AM 4/4/98 EST, you wrote: I think one of the problems with 'globalization' is the implication that industrialization is moving into otherwise non-industrial countries. In fact, that may not be true. AMEN. I am nearly finished with Susanne Jonas's excellent book on recent Guatemalan history. The notion that "globalization" is at work in Guatemala because there are maquiladoras is ridiculous. The primary features of the Guatemalan economy are its agro-exports, and the "informal economy" and seasonal labor that fail to begin to absorb the landless, mostly Indian, peasant. I snapped at Jim Devine a couple of months ago (sorry, Jim) for stating that there is some kind of "evening out" process taking place globally. The truth is that Guatemala is not rising up. The number of people living in povery in 1980 was 80%; in 1990 it was 87%. Louis Proyect
Re: globaloney-stripazation
I think one of the problems with 'globalization' is the implication that industrialization is moving into otherwise non-industrial countries. In fact, that may not be true. Alot of 'emerging' nations are not industrializing, they are simply being stripped. F'rinstance, the development of shrimpfarming in southeast asian countries didn't industrialize them, it ruined local economies, destroyed local ecologies, and then moved on without replacing the destroyed local economy with industrialization. The same thing is happening in south america. One of my students likened it to world wide strip mining. so, perhaps we could replace globaloney and globalization with 'stripazation'. maggie coleman [EMAIL PROTECTED] p.s. When the US broke ties with England as a colony, they replaced the local economy with an industrialized northeast -- owned and operated by US manufacturers. This does not seem to be the pattern of many countries in the twentieth century. e.g., Mexico has more factories, but they are owned and operated by US corporations. So while globalization may not be an adequate or well defined term, the trends of capitalism in the twentieth century are different than the growth of capitalism in the nineteenth century.
