Global Policy Forum

In our July 18 issue, the author of Globalization and Its Discontents, a former World Bank Chief Economist, had personally criticized Michel Camdessus, former Managing Director of the International Monetary Fund, in these terms: "In December 1997 in Kuala Lumpur, during a meeting of Ministers of Finance of the G-7 and leading Asian countries, I told Michel Camdessus, then the head (French) of the IMF, of my poor opinion of his recommendations. He replied that for a people to recover economically, "they must suffer...""

The following is Michel Camdessus' response:

To confine myself to the facts, I would make the following points: the only G-7 meetings I-but not Mr. Stiglitz-attended in my official capacity at the International Monetary Fund were Ministers of Finance meetings. No such meetings were held in November or December 1997 in Kuala Lumpur. I did stop over for a few hours in Kuala Lumpur in early December 1997 to deliver a speech (the text of which I have located) to the ASEAN Business Forum; but I never made, in Kuala Lumpur or anywhere else, the remarks he attributes to me-"they must suffer."

It is precisely against that argument-the notion that the suffering of adjustment has redeeming qualities-that I fought so tirelessly during my 13 years at the IMF. I challenge anyone to find, in the thousands of pages of speeches that I delivered during those years, the slightest trace of such an argument. On the contrary, it is the policy of strong support for countries in difficulty, when they are making every effort to solve their problems, that I consistently defended. I was criticized enough for that, especially in the United States. In contrast to what Mr. Stiglitz insists on trying to prove, this latter strategy, when combined with the requisite structural reforms, did achieve the expected results, sometimes within exceptionally short periods of time, when local political circumstances so allowed. That was the case in Korea. If Mr. Stiglitz requires proof of this, he need look no further than a response made to him early in his campaign against IMF policies (a response with prophetic implications for his Nobel Prize). The author of that response, whom nobody would accuse of indulgence toward the IMF, was the recently deceased MIT Professor of Economics and International Management, Mr. Rudi Dornbusch. "When countries arrive at the IMF, on a stretcher, this is not the time for cute ideas. Drastic policies are necessary to avoid hemorrhage, currency collapse and irreparable meltdown. Stabilization is neither a popularity contest nor a research seminar. Today no finance minister will opt for the Stiglitz Clinic of Alternative Medicine; they have the ambulance rush them to the IMF. And when they do, markets start taking confidence very soon and from there it is a short step to normalization. (...) Asia is doing well. The chief lesson for the IMF is that next time they should apply exactly the same remedies and enjoy as spectacular success."

Obviously, further lessons could be drawn from a serious discussion of the crises of the 1990s. At any rate, if Mr. Stiglitz wishes to take part usefully in that discussion, he would do well to avoid basic inaccuracies and, above all, such discreditable insinuations as those he made against my closest colleague, Mr. Fischer, whose unimpeachable integrity is admired worldwide, as is his intellectual and moral stature.

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