Global Policy Forum

By Eyal Press

Joseph Stiglitz is--as usual--running late. It is nearing 2:30 pm on a sunny afternoon in New York City and Stiglitz, an economist at Columbia University, is standing on the corner of 103rd Street and West End Avenue trying desperately to hail a cab. He needs to get across town to the Guggenheim Museum, where in five minutes he is scheduled to deliver an address on the state of the global economy in the aftermath of September 11. Stiglitz has not prepared a speech--half an hour earlier, as we were talking over lunch, he had completely forgotten the event was today--but that is the least of his worries. For Stiglitz, getting to appointments on time is a challenge; finding something provocative to say once he gets there is not.

Over the past several years, Stiglitz, a celebrated theorist who was awarded the 2001 Nobel Prize in economics for his work on asymmetric information, has grown accustomed to being at the center of controversy. From 1997 to 2000, he served as senior vice president and chief economist at the World Bank--a title that did not stop him from publicly criticizing the bank's sister institution, the International Monetary Fund. 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 US 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. Since trading in his job at the World Bank for a chair at Columbia, Stiglitz has stepped up his crusade to reshape the popular debate about globalization. At Columbia, he has launched an organization, the Initiative for Policy Dialogue, designed to furnish developing nations with alternative views on everything from trade policy to financial reform. His lectures on campus draw overflow audiences, and being purged from the World Bank seems only to have enhanced his mystique in the developing world. He is an adviser to several developing countries, including Serbia and Bulgaria, and he meets informally with the leaders of many more, often dispensing advice that puts him at odds with the IMF. He was recently flown down to Mexico at the invitation of that country's Foreign Ministry; afterward, he went to Ecuador to meet with leaders of that nation's central bank.

Stiglitz, 58, is hardly the first person to accuse the IMF of operating undemocratically and exacerbating Third World poverty. But he is by far the most prominent, and his emergence as a critic marks an important shift in the intellectual landscape. Only a few years ago, it was possible for pundits to claim that no mainstream economist, certainly nobody of Stiglitz's stature, took the criticism of free trade and globalization seriously. Such claims are no longer credible, for Stiglitz is part of a small but growing group of economists, sociologists and political scientists, among them Dani Rodrik of Harvard and Robert Wade of the London School of Economics, who not only take the critics seriously but warn that ignoring their concerns could have dire consequences. In his new book, Globalization and Its Discontents (Norton), 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.

How did an economist who until recently enjoyed the trust of the world's most powerful financial authorities come to sympathize with their most ardent critics? Stiglitz's break with the World Bank has earned him a reputation in the business press and among policy elites as an enfant terrible inclined to stir up trouble wherever he goes. His academic peers, however, describe him in markedly different terms. "There is something innocently nice about Joe," says Jagdish Bhagwati, one of his colleagues in the economics department at Columbia. "He's a big puppy dog," says Barry Nalebuff, an economist at Yale who has written papers with him.

In person, Stiglitz indeed comes across as good-natured and agreeable. When we first met, he invited me to his house for dinner. When he spoke about his experiences at the World Bank, his voice betrayed not a trace of bitterness. With his scruffy gray beard and frequently disheveled appearance--he is famous for walking around shoeless, and has trouble keeping his shirt tucked in--Stiglitz looks like the typical absent-minded professor. He also acts like one. Most of our interviews began at least an hour later than originally scheduled, a pattern that Stiglitz appeared to take in stride, as though this were an inevitable part of being Joseph Stiglitz.

And yet beneath the mellow exterior lies a fiercely independent, and at times disputatious, thinker. As far back as high school, when he was a star on the debating team, Stiglitz displayed a taste for intellectual combat, and an occasionally acid tongue. Asked once what developing countries should do with the annual reports the IMF prepares on member nations, Stiglitz recommended "picking it up, saying 'thank you very much' and dropping it straight in the garbage can."

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