With the publication last month of Globalization and Its Discontents, Joseph Stiglitz, a Nobel laureate in economic science in 2001, has become public enemy number one at the IMF.
In the course of 282 pages, Stiglitz accuses the Fund of acting in the interests of big US investment banks; of blind market obeisance leading it to bungle bailouts in Asia and Latin America; and of callousness towards those worst affected by its policy prescriptions.
After months of allowing Stiglitz to snipe at will from the wilderness, the IMF unleashed its counterattack at the book launch in Washington, 28 June. Ken Rogoff, IMF Director of Research, lashed out at Stiglitz in a broadside now posted on the IMF web site, for carelessly slandering IMF staff; accused him of policy megalomania; and did everything short of calling him a liar and a charlatan. In a 2 July press conference, IMF External Department head Thomas Dawson went one step further. Referring to Stiglitz’s assertions that the Fund has promoted terrorism in Pakistan by cutting educational spending, Dawson left no room for doubt – “It’s an absolute lie”. Further, in a speech to MIT alumni, he described Stiglitz’s suggestion that former IMF Deputy Managing Director Stanley Fischer used twisted IMF policies to ensure a job at Citicorp “repugnant”.
Bankwatchers would do well to proceed with caution before rallying to the defence of the embattled economist. Despite his attempt to cosy up to the global social justice movement, (saying it “has done a huge service in bringing into the open a series of issues which have really had too little attention”), Stiglitz is all too quickly forgetting the old adage, ‘Doctor, heal thyself.’ Much as he decries the IMF‘s hard-nosed approach to economic crisis, the World Bank itself withholds loans to developing countries that fail to secure the IMF‘s stamp of approval on their economic performance.
Railing against the lack of transparency in the Fund’s decision-making, Stiglitz contrasts the environment at the Bank as that of a “debating society”. However, he knows better than anyone that, starting with himself, there has been a stream of ‘debaters’ shown the door at the Bank when their ideas stray too far from the accepted doctrine. Senior Bank researcher David Ellerman, writing in the World Bank Staff Association newsletter at the end of 2001, charged that public relations staff are “the thought police to the black sheep in the organization who – within public view – are not ‘on message’.” (Bretton Woods Update 26, Bank staff criticise “thought police”) A jaded observer might be left to wonder if Stiglitz has been blindfolded as well as gagged.
One thing is clear. The Stiglitz-Fund mêlée has drawn attention to the desperate need for more debate on economic policy choices and the lack of transparency in the decision-making processes at the Bretton Woods institutions. This was highlighted by a 7 July Guardian editorial urging reform of the IMF. A little mudslinging might be just what is needed.
An open letter to Joseph Stiglitz
“IMF Economist Assails Author of Critical Book”, Washington Post, 2 July
The contented malcontent, The Guardian, 6 July
The Fund bites back, The Economist, 4 July