Stiglitz and the Limits of 'Reform'

It's global protest time again. When Bill Gates and other members of the global elite gathered in mid-September for the World Economic Forum in Melbourne, Australia, thousands of union members and activists filled the streets to protest the effects of unfettered free trade. The next opportunity to trouble a convocation of the world's bigwigs is in Prague at the end of September, when the World Bank and International Monetary Fund hold their annual meetings. In April, their midyear meetings brought thousands to Washington and shut down the city.

There's a longstanding split among those who protest and criticize these institutions--and their close relative, the World Trade Organization--between those who'd reform them and those who'd prefer to shut them down. Two forced departures from the World Bank have made the limits of reform irrefutably clear.

The first was the exit of former chief economist Joseph Stiglitz at the end of 1999. Stiglitz had made one too many public criticisms of the economic policies preferred by the bank and its ultimate master, the US government. And more recently, Ravi Kanbur, an outside economist whom Stiglitz brought aboard to supervise the writing of the bank's annual World Development Report, resigned "in anger" (as the New York Times put it) in June when he was ordered to revise the document to conform to the party line that growth is the highest good of economic policy.

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