"The Global Institutions of Globalization"

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The Global Institutions of Globalization”

Introduction

        The basis of this written assignment considers the impact, for good or ill, which two global institutions, the IMF and Group of Seven/Group of Eight have had on globalization in recent times. The first section of the paper analyzes what I believe to be Joseph E. Stiglitz’s three key arguments in the book, Globalization and its Discontents. The history of the Group of Seven/Group of Eight, its role, significance and the means of how this organization influences globalization economically, socially and environmentally are all addressed in the section half of this paper.

Book Review

 The core of the book, “Globalization and its Discontents,” is a closely argued condemnation of the IMF for multiple crimes including, but not limited to, the financial downgrade of the beggaring of Russia and the 1997 East Asia crisis. The argument that many of the economic ills of the past fifteen years can be traced back to powerful forces of the IMF, the Western financial community and U.S treasury are consistently sawed out throughout the book. Delving into the heart of the major crises of capitalism in recent times clearly reveals how the IMF appallingly mismanaged each case, demonstrating their lack of reform. Stiglitz also uncovers the hidden agenda behind the IMF as he strongly depicts the structural problems with global financial governance and the manner in which its institutions are deeply complicit with the main objectives of Wall Street and the US Treasury Department. He consistently highlights the fact that the IMF is working in a manner that directly contradicts its original objective of providing economic stability in times of crises. Furthermore, he calls our attention to the consistent gap between rhetoric and reality by exposing how the IMF instead of being accountable to the societies they impinge often behave as the apparatus of American principal.

Stiglitz complains that the IMF has done great damage through the economic policies it has prescribed to countries. In order for these countries to qualify for IMF loans, or loans from banks and other private-sector lenders, they must conform to policy guidelines regardless of the obvious turmoil that they entail. The majority of these banks and other external sources look to the IMF for confirmation on whether or not a borrower is creditworthy, which evidently limits these countries choices- cornering them to implement their imprecise prescriptions. (Stiglitz 204) Stiglitz discloses that by forcing nations receiving its money to advocate policies like capital market liberalization and massive privatization without trying to implement a social security net or a market regulatory mechanism, the IMF consequently generates immense damage instead of positive rehabilitation. The organization and its officials have ignored the implications of inadequate markets, information, and unworkable institutions- all of which are key aspects of developing countries. As a result, Stiglitz repeatedly notes the policies that the IMF has called for do not suit the countries for which the IMF advocates its policies. The IMF, he argues, instead of adopting a "cookie cutter" approach in which one set of policies is right for all countries regardless of their individual circumstances, deliberately ignores such facets.

“There are no smoking guns here. You won’t find hard evidence of a terrible conspiracy by Wall Street and the IMF to take over the world. I don’t believe such a conspiracy exists. The truth is subtler. Often it’s a tone of voice, or a meeting behind closed doors, or a memo that determines the outcome of discussions.” (Stiglitz xv)

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        Apart from a clearer perspective on why the IMF's policies were bound to fail, Stiglitz uncovers at length the hidden agenda behind the IMF. The continual huge bailout disbursements of the IMF to help countries in economic crisis only benefited the large American banks that made the bad loans, to make a clean profit. The countries that followed the IMF's prescriptions suffered deeply- leading to riots in such places as Indonesia where people saw both their savings and jobs wiped out at the same time. On the contrary, the countries that achieved quicker recovery are precisely those who managed ...

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