Renowned U.S. Economists Denounce Corporate-Led
by James L. Phelan
Renowned U.S. Economists Denounce Corporate-Led Globalization:
Nobel Prize winner Joseph Stiglitz and internationally acclaimed
economist Paul Krugman decry undemocratic, unsound, and unethical
It seems critics of corporate-led globalization have some
Recent Nobel Prize winner Joseph Stiglitz, along with well-known
economist Paul Krugman, have of late made a flurry of public statements
critical of the policies and processes of the World Trade Organization
(WTO), the World Bank / IMF, and the proposed Free Trade Area
of the Americas (FTAA) " while leaving plenty of harsh words
for the blatantly pro-corporate actions of the Bush Administration.
Both economists point to the disruptive and distorting influence
of large corporate entities through their dominance over both
domestic and international institutions.
Stiglitz and Krugman have begun to voice their indignation
more frequently in the press, raising many of the same concerns
that social justice and environmental advocates have long made
about the disproportionate influence of big business and the hypocrisy
of "free market" dogma.
Taking Care of Business In a recent column appearing in the
New York Times, Krugman stated: "Cynics tell us that money
has completely corrupted our politics, that in the last election
big corporations basically bought themselves a government that
will serve their interests. Several related events last week suggest
that the cynics have a point." As evidence of heavy-handed
corporate opportunism, Krugman takes issue with the recent claims
by security interests that federalizing airport security would
represent a "taking" " a bald move by private interests
to maintain a questionable security status quo free from public
calls for more systematic scrutiny.
Krugman then assails the House "Stimulus Bill",
stating that the "remarkable thing we learned from that bill
was that conservative politicians " who used to claim that
they were improving incentives by reducing marginal tax rates,
and that it was just an incidental side effect that big corporations
and wealthy individuals were so richly rewarded " no longer
feel the need to disguise their payoffs." As he states, the
principal goal of the bill is to repeal retroactively the corporate
alternative minimum tax, "which means that selected companies
would immediately receive huge lump sum payments from the government,
totaling around $25 billion, with no incentive effect at all."
What's worse is that "there are no strings attached to those
gifts: if the companies want to, say, pay huge bonuses to top
executives, they can. Republicans have always depended on the
kindness of corporations, but this bill takes that faith to extremes."
Very little here, says Krugman, is representative of sound
economic policies aimed at economic recovery, not to mention the
need for shared sacrifice in times of belt-tightening. Corporate
interests, as Krugman rightly points out, have friends in convenient
political circles. In a blunt conclusion, Krugman sums it up saying
that "the truth must be spoken. Lately our government has
not exactly inspired confidence; its response to terrorism is
starting to look a bit scatterbrained. But on some subjects our
leaders are quite clearheaded: whatever else may be going on,
they make sure that they are taking care of business."
Corporate-Led Globalization When it comes to decrying the
disruptive influence of the corporate agenda internationally "
whether in the WTO or the FTAA " most critics have focused
their energies on denouncing the anti-democratic nature of international
trade and investment regimes and their narrow focus on liberalizing
markets at all costs.
A recent interview with Joseph Stiglitz, however " the
ultimate World Bank/IMF insider " sheds new light on what
many have long suspected: documents and testimony on secret industry-
governmental meetings, the behind the scenes agenda-setting of
transnational corporate interests, and the apparent hidden agenda
of the WB/IMF.
This conspiratorial assessment of hidden agendas could easily
be shrugged off as baseless " except that this account comes
to us from a fired-up and increasingly political Stiglitz. Fired
from the World Bank in 1999 for his criticism of the WB/IMF's
policies, Stiglitz has refused to keep quiet as these institutions
" largely serving under the dictates of the U.S. Treasury
Department " impose policies internationally that he claims
have "condemned people to death."
Only recently in the news for winning the Nobel Peace Prize
for economics, Stiglitz seems to be using this surge in international
attention to criticize corporate-friendly policies and to lend
his support to the momentum of social justice groups organizing
for greater transparency and participation in international policy-
In a recent debriefing with the London Observer's Gregory
Palast, the former World Bank Chief Economist roundly attacked
the hidden agenda of these international institutions. In addition
to testifying to the ideological foundations of much of the WB/IMF's
condition-laden policies lending policies, Stiglitz denounces
the unethical agenda that these institutions impose on all countries
that explicitly create conditions favorable to international oligarchs
and transnational enterprise.
Having acquired a handful of World Bank documents from undisclosed
sources marked "confidential," "restricted,"
and "not otherwise (to be) disclosed without World Bank authorization,"
Stiglitz began to document the real effects and aims of the World
Bank's four step, one-size-fits-all, economic restructuring package
imposed on less industrialized countries.
The first step, according to Stiglitz, is the promotion of
state-level corruption as the facilitator of the "privatization"
requirement which often also serves U.S. political goals "
a process that Stiglitz says would more be accurately called "briberization."
This is followed by step two, "Capital Market Liberalization"
which sets up predictable cycles of "hot money" speculation
in non-productive assets that ultimately leaves the national economy
hemorrhaging from loss of controls on capital.
Step three is "'Market-Based Pricing', a fancy term for
raising prices on food, water and cooking gas. This leads, predictably,
to Step-Three-and-a-Half: what Stiglitz calls, 'The IMF riot.'"
An outraged populace predictably reacts to the fact that they
can no longer afford to feed themselves. According to the documents
obtained from the WB, these "IMF riots" are predicted
and documented, stating that the resulting "social unrest"
and civil strife has to met with "political resolve."
Yet, as Gregory Palast points out, this process has one positive
outcome "for foreign corporations, who can then pick off
remaining assets, such as the odd mining concession or port, at
fire sale prices." Step four is not far behind: the "poverty
reduction strategy" called "Free Trade."
Stiglitz, however, is careful to point out that the World
Bank and the IMF are not the heartless "free market"
ideologues they might seem. Although the WB/IMF work devoutly
to remove the uneconomic subsidies placed on food and other items
essential to the poor, they are not necessarily against state
interventions in markets " as Stiglitz makes clear, "when
the banks need a bail- out, intervention (in the market) is welcome."
For example, as Palast points out, "the IMF scrounged up
tens of billions of dollars to save Indonesia's financiers and,
by extension, the US and European banks from which they had borrowed"
in its enlightened redistribution of subsidies.
A Political Conclusion Palast notes that from this assessment
a recognizable pattern emerges: "There are lots of losers
in this system but one clear winner: the Western banks and US
Treasury, making the big bucks off this crazy new international
So what would Stiglitz recommend in place of the usual WB/IMF
fare? "Stiglitz proposed radical land reform, an attack at
the heart of 'landlordism', on the usurious rents charged by the
propertied oligarchies worldwide, typically 50% of a tenant's
This is, alas, a more delicate subject. It's easier to simply
have faith that constant economic growth will deliver us from
the difficult issues of land tenure and access to income-bearing
assets. This very political program is understandably not on the
WB/IMF's list of chores, since as Stiglitz reminds us, "If
you challenge [land ownership], that would be a change in the
power of the elites. That's not high on their agenda."
According to Palast, ultimately "what drove [Stiglitz]
to put his job on the line was the failure of the banks and US
Treasury to change course when confronted with the crises "
failures and suffering perpetrated by their four-step monetarist
mambo. Every time their free market solutions failed, the IMF
simply demanded more free market policies."
With increasing numbers of prominent insiders and mainstream
economists now sounding the alarm bells over corporate-led globalization,
the task for social justice and environmental advocates has become
ever-clearer. We must organize to demand that these illegitimate
trade policies and institutions are either nixed or fixed through
deep democratic reform.
Paul Krugman, "Taking Care of Business", Common
Dreams, October 28, 2001.
Gregory Palast, "The Globalizer Who Came in from the
Cold", The London Observer, October 10, 2001.
Kintto Lucas, "FTAA (Free Trade in the Americas) Is a
Threat, Warns Nobel Laureate", Common Dreams, October 29,