Stiglitz, Joseph E(ugene) 1943-
STIGLITZ, Joseph E(ugene) 1943-
PERSONAL: Born February 9, 1943, in Gary, IN; son of Nathaniel David (an insurance salesman) and Charlotte (a school teacher; maiden name, Fishman) Stiglitz; married Jane Hannaway, December 23, 1974; children: Siobhan, Michael, Edward, Julia. Education: Amherst College, B.A., 1964; Massachusetts Institute of Technology, Ph.D., 1966.
CAREER: Cowles Foundation, Yale University, New Haven, CT, professor of economics, 1970-74; St. Catherine's College, Oxford, England, visiting fellow, 1973-74; Stanford University, Stanford, CA, Joan Kenney Professor, 1974-76; Oxford University, Oxford, Drummond Professor, 1976-78; Institute for Advanced Studies of Mathematics, Princeton, NJ, Oskar Morgenstern distinguished fellow, 1978-79; Princeton University, Princeton, professor of economics, 1979-88; World Bank, Washington, DC, chief economist and senior vice president, 1997-2000; Brookings Institution, Washington, DC, senior fellow, 2000-01; Columbia University, New York, NY, professor of economics and international and public affairs, 2001—; President's Council of Economic Advisors, member, 1993-97, chairman, 1995-97; member of Institute for Policy Research (senior fellow, 1991-93) and British Academy; advisor to organizations and governments, including those of Serbia and Bulgaria.
MEMBER: American Economics Association (executive committee, 1982-84; vice president, 1985), American Academy of Arts and Sciences, National Academy of Science, Econometric Society.
AWARDS, HONORS: Guggenheim fellow, 1969-70; honorary degrees from Yale University, 1970, Amherst College, 1974, University of Leuven, 1994; John Bates Clark Award, American Economics Association, 1979; international prize, Accademia Lincei, 1988; Union des Assurances de Paris prize, 1989; Nobel Prize (economics; shared), 2001, for "analyses of markets with asymmetric information."
(Editor, with Hirofumi Uzawa) Readings in the Modern Theory of Economic Growth, MIT Press (Cambridge, MA), 1969.
(With Anthony B. Atkinson) Lectures on Public Economics, McGraw-Hill (New York, NY), 1980.
(With David M. G. Newbery) The Theory of Commodity Price Stabilization: A Study in the Economics of Risk, Oxford University Press (New York, NY), 1981.
(With Richard Arnott) Equilibrium in Competitive Insurance Markets: The Welfare Economics of Moral Hazard, Institute for Economic Research, Queen's University (Kingston, Ontario, Canada), 1982.
(With Richard Arnott) Labor Turnover, Wage Structures, and Moral Hazard: The Ineffıciency of Competitive Markets, Institute for Economic Research, Queen's University (Kingston, Ontario, Canada), 1982.
(With Richard Arnott) Moral Hazard and Optimal Commodity Taxation, Institute for Economic Research, Queen's University (Kingston, Ontario, Canada), 1983.
(Editor, with G. Frank Mathewson) New Developments in the Analysis of Market Structure: Proceedings of a Conference Held by the International Economic Association in Ottawa Canada, MIT Press (Cambridge, MA) 1986.
Economics of the Public Sector, W. W. Norton (New York, NY), 1986.
(With Avishay Braverman) Credit Rationing, Tenancy, Productivity, and the Dynamics of Inequality, World Bank (Washington, DC), 1989.
(Editor, with Arnold Heertje) The Economic Role of the State, B. Blackwell (Cambridge, MA), 1989.
(With others) Establizaçã e crescimento econômico na América Latina, Libros Técnicos e Científicos Editora (Rio de Janeiro, Brazil), 1991.
(With Raaj K. Sah) Peasants versus City-Dwellers: Taxation and the Burden of Economic Development, Oxford University Press (New York, NY), 1992.
Principles of Microeconomics, W. W. Norton (New York, NY), 1993.
Principles of Macroeconomics, W. W. Norton (New York, NY), 1993.
(Editor, with Karla Hoff and Avishay Braverman) The Economics of Rural Organization: Theory, Practice, and Policy, Oxford University Press (New York, NY), 1993.
Economics, W. W. Norton (New York, NY), 1993, (with Carl E. Walsh) 2nd revised edition, 2002.
Whither Socialism? MIT Press (Cambridge, MA), 1994.
(With Robin W. Boadway) Economics and the Canadian Economy, W. W. Norton (New York, NY), 1994.
(With Nicholas H. Stern) A Framework for a Development Strategy in a Market Economy: Objectives, Scope, Institutions, and Instruments, European Bank for Reconstruction and Development (London, England), 1997.
H. C. Recktenwald-Preis für Nationalökonomie, Universitätsbibliothek Erlangen-Nürnberg (Nürnberg, Germany), 1998.
More Instruments and Broader Goals: Moving toward the Post-Washington Consensus, UNU/WIDER (Helsinki, Finland), 1998.
(With Kaushik Basu and Garance Genicot) Household Labor Supply, Unemployment, and Minimum-Wage Legislation, World Bank (Washington, DC), 1999.
State versus Market: Have Asian Currency Crises Affected the Reform Debate? Bangladesh Economic Association (Dhaka, Bangladesh), 1999.
(Editor, with Boris Pleskovic) Annual World Bank Conference on Development Economics, World Bank (Washington, DC), 2000.
(Editor, with Pierre-Alain Muet) Governance, Equity, and Global Markets: The Annual Bank Conference on Development Economics, Oxford University Press (New York, NY), 2001.
(Editor, with Shahid Yusuf) Rethinking the East Asia Miracle, Oxford University Press (New York, NY), 2001.
Joseph Stiglitz and the World Bank: The Rebel Within (selected speeches), commentary by Ha-Joon Chang, Anthem Press (London, England), 2001.
(Editor, with Gerald M. Meier) Frontiers of Development Economics: The Future in Perspective, Oxford University Press (New York, NY), 2001.
(Editor, with Gerard Caprio and Patrick Honohan) Financial Liberalization: How Far, How Fast? Cambridge University Press (New York, NY), 2001.
Globalization and Its Discontents, W. W. Norton (New York, NY), 2002.
American editor of Review of Economic Studies, 1968-76; associate editor of American Economic Review, 1968-76; editor of Journal of Economic Perspectives, 1986-93; member of editorial board, World Bank Economic Review; contributor to journals and periodicals.
SIDELIGHTS: Joseph E. Stiglitz was a co-recipient of the 2001 Nobel Prize for Economics, along with fellow Americans George Akerlof and Michael Spence, for work begun decades earlier that concludes that because players have different levels of access to the same information, free markets don't always work. Stiglitz was an advisor to President Clinton and was the chief economist of the World Bank, a position he left after much controversy over his criticism of the World Bank's sister organization, the International Monetary Fund (IMF). Both were founded following World War II, based on the ideals of economist John Maynard Keynes, who saw them as a way to provide capital to help governments increase output when markets failed. Although they continued with the original intent, according to Stiglitz, they also evolved to include the interests of the financial community.
Nation contributor Eyal Press noted that "in a series of speeches and articles that culminated in a scathing April 2000 essay in the New Republic, Stiglitz blasted the IMF for being every bit as secretive, undemocratic, and indifferent to the poor as its critics claimed.
Stiglitz's outspokenness, unprecedented for a high-ranking insider, infuriated top officials at the IMF and U.S. Treasury Department, and eventually led James Wolfensohn, the World Bank's president, to inform him that he would have to mute his criticism or resign. Stiglitz chose to leave. He has not, however, quieted down."
Stiglitz grew up in a middle-class family in Gary, Indiana, a steel town that suffered plant closings and cyclical layoffs, subjects Stiglitz went on to study at the Massachusetts Institute of Technology. By the time he was twenty-six, he was a full professor at Yale University. His lifelong interest in development policy was sparked when he visited Kenya at the invitation of the Rockefeller Foundation. He has taught at a number of prestigious universities and written or edited a long list of books and papers on economic policy.
When Stiglitz left the IMF, he accepted a position with Columbia University and established the Initiative for Policy Dialogue, through which he hoped to wrest exclusivity of development policy from the IMF. In his perhaps most significant book to date, Globalization and Its Discontents, he revisits his years with the World Bank and offers his interpretations and criticisms of the policies formed there. A liberal with populist leanings, Stiglitz could never be described as radical, and he came to the World Bank full of optimism. Almost immediately he took issue with IMF policy regarding Ethiopia when the IMF suspended loans based because that country refused to accept financial deregulation. Stiglitz was amazed, because the Ethiopian government was dramatically improving the lives of its people, but the IMF insisted that their policies be adopted with no regard for the experiences and opinions of the country's leaders.
The rift between Stiglitz and the IMF deepened with the 1997 Asian crisis. Stiglitz considered the IMF and U.S. Treasury Department's advice to Asians to remove restriction on capital movement as pandering to Wall Street. South Korea, like Singapore, had become a model of how hard work, saving, and government participation could turn around a poor country. South Korea had raised its per-capita gross domestic product from ninety dollars to forty-four hundred dollars from 1950 to 1990. The flow of money was restricted to prevent damaging changes in exchange rates, and American financial firms were not allowed in. When this changed in the 1990s, money flowed in and out, largely on speculation. With the collapse of the Thai economy, money rapidly left the countries who had embraced IMF policy, and their markets collapsed. The situation worsened when the IMF ordered them to raise interest rates and balance budgets to restore confidence, unnecessary in most cases, because the Asian countries, unlike those in Latin America, did not run large budget deficits or print too much money. The changing monetary policy unnerved investors even further, and the crisis spread to Malaysia and Indonesia.
"High interest rates and tight fiscal policies, the standard tools of the fund's medical kit, pleased Wall Street creditors," said Joseph Kahn in the New York Times Book Review. "But slow growth was the problem, not inflation, and high interest rates painfully stifled growth."
John Cassidy, who reviewed the volume in the New Yorker, felt that "Stiglitz's analysis of what happened in Russia will be more controversial. As he details, the IMF advanced the country billions of dollars in loans to support the 'shock therapy' that Boris Yeltsin's government administered after the collapse of the Soviet Union. The therapy involved freeing prices, hawking state-owned enterprises to private investors at a discount, and trying to maintain a strong currency. Stiglitz argues that these policies were misguided, and he marshals some depressing statistics to support his case. . . . Stiglitz commends the gradual approach that China and Poland have taken toward liberalizing their economies."
Press noted that Stiglitz "argues that many of the complaints voiced by protesters in recent years—that IMF structural adjustment programs have caused widespread suffering, that free-trade agreements mainly benefit the rich, that privatization has proved disastrous in many countries—have a solid basis in fact. Unless the rules of global capitalism are radically altered, he warns, the gap between the world's rich and poor, and hence the social conditions that have fueled instability in places like Pakistan, will not go away anytime soon."
The classic economic theory that the expansion of trade and commerce creates a positive effect seemed to work during the 1970s and 1980s, when countries like Singapore and South Korea reduced poverty through increased exports. Stiglitz writes that globalization no longer works for the world's poor, the environment, or the stability of the global economy. He alleges that the advanced industrial countries are too closely aligned with the World Bank and IMF.
Michael J. Mandel reviewed Globalization and Its Discontents in Business Week, observing that it "has the potential to be the liberal equivalent of Milton Friedman's 1962 classic Capitalism and Freedom, which helped provide the intellectual foundation for a generation of conservatives." Mandel felt, however that it does not rise to that level. "While Stiglitz makes a strong case for government-oriented development policy, he ignores some key arguments in favor of the market. In particular, even if government intervention works in theory, many developing countries don't have the sort of professional institutions that could implement good policies."
Cassidy wrote that "the governments of the rich countries have pushed developing nations to open their borders to computers and banking services, but continued to protect their own farmers and textile workers from the cheap food and clothes that poor countries produce. The have supported the extension of patent agreements that guarantee high profits for Western pharmaceutical companies like Pfizer and Merck while depriving African governments of the drugs they need to fight an AIDS epidemic. 'The critics of globalization accuse Western countries of hypocrisy,' writes Stiglitz, 'and the critics are right.'" Cassidy noted that during the last decade, "something has gone wrong. Since 1990, the number of people living on less than two dollars a day has risen by more than a hundred million, to three billion. The gap between rich and poor countries has turned into a chasm."
Stiglitz makes no apologies for the protests that have disrupted international summits and notes that before these events became commonplace, there was no way to express dissatisfaction. He feels that even with the attendant problems and excesses that occurred during some demonstrations, "it is the trade unionists, students, environmentalists—ordinary citizens—marching in the streets of Prague, Seattle, Washington, and Genoa who have put the need for reform on the agenda of the developed world."
Stiglitz includes a list of the reforms he would like to see incorporated into new World Bank and IMF policy.
"Not coincidentally, Stiglitz believes that promoting local and international democracy is fundamental to reforming global economic policy," stated James M. Rossi in Human Nature Review. "Democracy aids social stability, empowers the free flow of information, and promotes a decentralized economy upon which efficient and equitable economies rely. Extending IMF and WTO [World Trade Organization] voting rights to developing countries, along with public accountability, would be a good start. For Stiglitz, promoting democracy comes before promoting business."
BIOGRAPHICAL AND CRITICAL SOURCES:
Woolley, Frances, The Public Sector in Canada: A Canadian Supplement to Joseph Stiglitz's Economics of the Public Sector, second edition, W. W. Norton (New York, NY), 1994.
American Journal of Agricultural Economics, August, 1995, William A. Ward, review of The Economics of Rural Organization: Theory, Practice, and Policy, p. 814.
Banker, June, 2002, Suzanne Miller, review of Globalization and Its Discontents, p. 88.
Business Week, June 17, 2002, Michael J. Mandel, review of Globalization and Its Discontents, p. 17.
Challenge, March, 2002, Ha-Joon Chang, "The Stiglitz Contribution," p. 77.
Contemporary Review, October, 2001, Chris White, "Joseph Stiglitz: An Economist at the World Bank," p. 219.
Economic Development and Cultural Change, April, 1995, Jean-Marie Baland, review of Peasants versus City-Dwellers: Taxation and the Burden of Economic Development, pp. 681-685.
Economic Journal, July, 1994, Pradeep Mitra, review of Peasants versus City-Dwellers, pp. 964-966; July, 1996, Keith Cowling, review of Whither Socialism? pp. 1098-1100.
Economic Record, December, 1997, James Alvey, review of Whither Socialism? p. 387.
Economist, February 17, 1996, review of Whither Socialism? p. S10; June 8, 2002, review of Globalization and Its Discontents.
Financial Times, July 13, 2002, Julia Llewellyn, "A Beautiful Mind at the Barricades" (interview), p. 3.
Foreign Affairs, July-August, 2002, Barry Eichengreen, review of Globalization and Its Discontents, p. 157.
Human Nature Review, July 9, 2002, James M. Rossi, review of Globalization and Its Discontents, pp. 293-296.
Journal of Development Economics, August, 1995, Lee J. Alston, review of The Economics of Rural Organization, pp. 502-504.
Journal of East Asian Studies, May, 2002, Marcus Noland, review of Rethinking the East Asia Miracle, pp. 683-684.
Journal of Economic Literature, December, 1994, Debraj Ray, review of The Economics of Rural Organization, pp. 1931-1933.
Kirkus Reviews, April 1, 2002, review of Globalization and Its Discontents, p. 478.
Nation, June 10, 2002, Eyal Press, "Rebel with a Cause," p. 11.
New Republic, April 17, 2000, Joseph E. Stiglitz, "The Insider—What I Learned at the World Economic Crisis," p. 56.
New Yorker, July 15, 2002, John Cassidy, review of Globalization and Its Discontents.
New York Times Book Review, June 23, 2002, Joseph Kahn, review of Globalization and Its Discontents, p. 12.
Progressive, June, 2000, Lucy Komisar, interview with Stiglitz, p. 34.
Southern Economic Journal, January, 1995, Subarna K. Samanta, review of The Economics of Rural Organization, p. 896.
Urban Studies, March, 1994, W. Paul Strassman, review of Peasants versus City-Dwellers, pp. 329-330.
Wall Street Journal, May 30, 2002, Brink Lindsey, review of Globalization and Its Discontents, p. D7.
Business Week Online,http://www.businessweek.com/ (November 19, 2001), interview with Stiglitz.*