Re: [Fwd: CAGE: Interesting Article by Joseph Stiglitz]

At 02:31 AM 4/12/00 -0400, Boris Stremlin wrote:

>This Stiglitz piece made for fascinating reading.  Most importantly,
>Stiglitz raised the question of whether there is in fact a method behind
>the madness.  One wonders if the IMF's (cum Treasury
>Dept's) liberalization policies of the 90's as deliberately designed  to
>foster instability in all regions beyond North America as a conscious
>geopolitical strategy.  The offshore banks Stiglitz mentions, which became
>repositories for capital leaving individual countries, in turn became
>mechanisms for ensuring the election of complicitous leaders (e.g. Yeltsin
>and Kuchma in Eastern Europe).  It would also be interesting to speculate
>about whether the U.S. has a contingency plan in the pursuance of global
>dominance in an age when the IMF has been discredited.  Could Kosovo,
>which gave birth to the so-called Blair Doctrine, be a sign of things to
>come?  
>
>-- 
>Boris Stremlin
>bc70219@binghamton.edu
>
>
>



If there was a method to the madness, I'm skeptical of whether or not its purpose was to "foster instability" all over the globe.  I think there may have been a predisposition on the part of the free marketeers in the IMF, the Treasury and elsewhere, to liberalize the developing countries and the transition economies as quickly as possible.  The logic of such a plan would have been reminiscent of what I have heard referred to as the "bicycle theory" of trade liberalization (cf. Aho and Aronson 1985).  According to this "theory" (actually, an intuition), much as a bicycle will fall over unless it keeps moving, trade liberalization (and, by extension, financial liberalization and transition from socialism) can proceed only if momentum in its favor is sustained.

Thus, if there was a "method to the madness", it was the desire on the part of the free marketeers to create a truly global liberal economic order as quickly as possible.  I don't think there was any big secret about these intentions.  Note Jeffrey Sachs' confident declaration of the attainability of such a goal in his 1995 _Foreign Policy_ article.

The problem with this agenda is that the bankers and economists who favored the free-market agenda, whatever their credentials in the economic and financial world might be, have been naive in the field of international relations.  I think there has been a tendency, certainly on the part of the US Treasury, to ignore Russia's very real geopolitical and security interests, not to mention its national pride, and to try to use U.S. financial support in a clumsy way as leverage (Never send a bunch of economists and bankers to do a political scientist's job, right? : ) ).  

In 1997, I had the privilege of hearing Dr. Stiglitz speak at the Eastern Economic Association annual meeting, and, from what he said at that time, I believe he was aware even then of the naivete of the idea that the post-Cold War world was automatically going to take the U.S. path.  As I recall them, his arguments were reminiscent of Samuel Huntington's argument from his 1999 article, "The Lonely Superpower" and his 1996 piece "The West:  Unique, Not Universal."  That is, the argument of both men oppose aggressive, unilateralist U.S. demands and the notion of convergence of global culture toward the West.

REFERENCES

Aho, C. Michael, and Jonathan David Aronson.  Trade talks : America better listen! New York, N.Y.: Council on Foreign Relations, 1985.

Huntington, Samuel P. The lonely superpower.  Foreign Affairs 78, no. 2 (Mar/Apr 1999): 35-49.

Huntington, Samuel P.  "The West: Unique, not universal." Foreign Affairs. 75, no. 6 Nov/Dec 1996: 28-46.


Sachs, Jeffrey D.  Consolidating capitalism.  Foreign Policy 98 (Spring 1995) 50-64.
--
Jeffrey L. Beatty
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