How is the IMF view of the global economy similar to Charles E. Wilson’s famous remark that “What’s good for General Motors is good for the country”?
Explain how Poland provides an example of alternative strategies to those advocated by the Washington Consensus. To what extent did Poland use “shock therapy”? To what extent did it pursue the gradualist approach? (pp. 180-181)
Explain how China provides an example of alternative strategies to those advocated by the Washington Consensus. To what extent did China use “shock therapy”? To what extent did it pursue the gradualist approach? (pp. 180-187)
According to Stiglitz, “The contrast between China’s strategy and that of Russia could not be clearer.” What are the differences between the two strategies? (p. 182)
Describe China’s process of creative destruction. (p. 183)
In its quest for both stability and growth, what objectives did China put ahead of privatization and restructuring existing enterprises? Why? (pp. 184-185)
Provide examples of why Stiglitz claims “The ultimate irony is that many of the countries that have taken a more gradualist policy have succeeded in making deeper reforms more rapidly.” (p. 185)
What was the role of township and public enterprises in the early years of China’s economic transition? What was the IMF’s attitude toward these enterprises? (p. 185)
Poland and China show that there were alternative transition strategies to the ones adopted in Russia. Why might those strategies not work in Russia? What are the differences in political, social, and historical context between Poland, China, and Russia? (p. 186)
What is the excuse of the shock therapists and why is Stiglitz not convinced by it? (p. 187)
If the transition from communism to a market economy is perceived as a race between the tortoise and the hare, which countries are examples of tortoises (i.e., adopting gradualist policies) and which countries are examples of hares (i.e., adopting shock therapy)? Who one the race? Which approach has been more successful? (p. 187-188)
What is the one benefit of Russia’s 1998 crisis? How and why it is a benefit? (p. 189)
What should Russia encourage that goes beyond its focus on macrostabilization? How have IMF policies helped or hindered this effort? (p. 190)
Explain why Stiglitz says Russia needs to impose a federalist government structure “that provides compatible incentives at all levels.” (p. 190)
What does Stiglitz say is “one factor essential to establishing a good business climate,” and why does he say it will “prove particularly difficult to achieve given what has happened over the past decade?
What changes does Stiglitz suggest for Russia’s tax policy? (p. 191)
Provide a brief summary of the “bleak picture of Russia in transition.” (p. 193)
Globalization and Its Discontents
Joseph E. Stiglitz
Chapter 8 – The IMF’s Other Agenda
According to Stiglitz, the IMF believes it is fulfilling the tasks assigned to it. What are these tasks?
Explain how Stiglitz believes that the IMF has failed in its mission and that the failures are “not just accidental but the consequences of how it has understood its mission.” (pp. 195-213)
How is the IMF view of the global economy similar to Charles E. Wilson’s famous remark that “What’s good for General Motors is good for the country”? (p. 195)
Explain Keynes’s conception of the International Monetary Fund and its role. (pp. 196-197)
Explain how, in the opinion of Stiglitz, the market fundamentalists who dominate the IMF have “not articulated a coherent theory of market failure that would justify its own existence and provide a rationale for its particular interventions in the market.” What have been the consequences of this?
Explain how the IMF’s view of foreign exchange markets differs from its view of other markets. How might this be perceived as another example of hypocrisy in IMF policies? To what extent does Stiglitz agree with the IMF’s view of foreign exchange markets and how does it contribute to his views about market interventions? (pp. 197-199)
Explain how the lack of a coherent and persuasive theory of contagion may lead the IMF to spread a financial crisis rather than containing it. (pp. 199-200)
When are trade deficits a problem? When are they not a problem? How does this provide an example of incoherent IMF policies? (pp. 200-201)
Explain how the way the IMF handles bankruptcies represents another area where the Fund’s approach is plagued with intellectual inconsistencies. (pp. 201-203)
How does the “bail-In” strategy that was applied to Romania provide another example of a failed IMF approach? (pp. 203-205)
What was logic behind expanding the IMF’s role as a “lender of last resort”? What is Stiglitz’s critique of this strategy? (pp. 205-206)
According to Stiglitz, what other interests is the IMF pursuing (other than the objectives set out in its original mandate)? How are these interests in conflict with the original objectives? (pp. 206-213)