In today’s globalization debate, the insider-turned-whistleblower par excellence is Professor Joseph Stiglitz, currently professor of economics and political science at Columbia University in New York, and prolific author of popular books on the International Monetary Fund, World Bank, and other agents of global economic policy.

His knowledge of these institutions comes from the eight years he served at the heart of the Washington establishment through the Clinton era as the Chairman of Council of Economic Advisers from 1992, and, from 1996, Chief Economist at the World Bank itself.

At the end of 1999 he quit his position at the World Bank in acrimonious circumstances and turned his attention to exposing what he saw as the corruption of its development goals by a fundamentalist economic philosophy variously called the Washington Consensus or neo-liberalism.

The seminal book of the period, and bed time reading for the burgeoning ‘anti-globalization movement’, was Stiglitz’s account of what he had seen at his time at the World Bank. “Globalization and It’s Discontents” delineates the take over of the Bretton Woods institutions – the IMF, World Bank – by the purveyors of a fundamentalism, which through financial liberalization, privatization and monetarism sought to mould the economies of the world, from Latin American to Africa, in its image.

Argentina became the symbol of the effects of these wrong-headed policies as it crashed so disastrously in 2001 as capital was allowed to jump the country because of the lack of financial regulation. But everywhere these policies appeared, Stiglitz contended in his book, the results had been massive inequality and financial instability. His latest book, The $3 Trillion War, which was released in March, is an attempt, through precise accounting, to find out the cost of the war in Iraq, and looks at the economic system now being imposed on Iraq.

“I think one of the last attempts to impose neoliberal doctrines was in Iraq,” he says. “After the World Bank had abandoned these ideas, the Bush administration was pushing it in Iraq: instant liberalization, instant privatization, even if it was against international law we tried to push it. It’s played a role in the difficulty of recovery.”

The Bush administration has overseen the privatization of all the natural resources in the Iraqi economy, through the constitution itself.

“I think one of the big, big worries is that the privatizations will not have legitimacy and without legitimacy they may be reversed,” says Stiglitz. “And if there is worry about them being reversed it will undermine investment, it will make it more likely that the privatizations will not have the beneficial affect that was hoped, and there will be asset stripping rather than wealth creation, so I think it was a very foolish thing to do.”

This kind of economic fiat from the Bush administration and their lackeys in the Bretton Woods institutions is being bucked most forcefully in Latin America, under the nationalisation programs of Hugo Chavez in Venezuela and Evo Morales in Bolivia, as well as more moderate leaders in Peru, Chile, and even Argentina. Stiglitz thinks this is a welcome progression.

“One of the things they did that makes a lot of sense is renegotiate the contracts,” he says. “It was clear that the previous governments had really given away the natural resources under terms that were disadvantageous to the people of those countries. And we say in economics, There was a lot of money of the table; they succeeded in renegotiating so there’s a lot more money on the table for the people of Bolivia and Venezuela, that made a lot of sense.

“Now, the notion that you would want to invest more in education and health also makes a lot of sense,” he continues. “What we don’t yet know is the extent to which they will be able to succeed in doing what the previous governments failed, which was to provide a broad basis for development. “

Academics, journalists and activists on the Left in Latin America have been criticizing the neoliberalism of the American government – Republican and Democrat – ever since Guatemalan democracy was subverted in 1954 at the behest of the United Fruit Company. But having Stiglitz on their side gives them a patina and polish that is very much needed. And his influence may have even punctured the impenetrable walls at the IMF and World Bank.

“At least officially these institutions have recognized some of the limits of the Washington Consensus policies,” he says. “They recognize that they pay too little attention to problems of equity distribution, they recognize that capital market liberalization often does not lead to greater stability.

“There are more caveats in their advice than they had previously given. The World Bank is now much more aware of the problems of privatizations, and that if it is done poorly it can set the government back.

“So I would feel quite strongly that the in World Bank, and to some extent the IMF, there is an awareness of limitations of some earlier advice. There are still I would say on balance more confidence in those policies than I think the evidence warrants.”

But whatever is happening in these institutions perhaps matters less than what is happening with the political realm. Journalist Eva Gollinger has chronicled the attempts by the Bush administration to liquidate Venezuelan democracy in the 2002 coup, and Morales has stated he believes the US is actively trying to destabilize Bolivia. Does Stiglitz believe that the Republican Party will allow any deviation from the Washington Consensus?

“I think we live in a different world than we lived in the 1980s,” he says. “In the 1980s the CIA could get away with regime change of regimes that it didn’t like in other countries. We are in a different world, and we are in a world in which that kind of strategy risks backfiring. And it happened in Venezuela: after the US attempted coup, Chavez electoral vote increased markedly, and I think it’s partly because countries don’t like the US coming in and changing their government from the outside. No matter where it is, in general it’s not welcome.”

This website uses IntenseDebate comments, but they are not currently loaded because either your browser doesn't support JavaScript, or they didn't load fast enough.