Stiglitz vs. Wolf: reflecting on few points

I thought I would enlist few points that I wish we discussed more in depth from last week.

1) While Wolf acknowledges that not everyone has equally benefitted from globalization (as opposed to its initial promise), he seems to be tolerant of the disparity between advanced and developing nations. He explains, "most opponents of the market economy compare the worst of today with the best [and]..that may seem fair enough. But it makes as much sense to compare the worst of today with the normal in the past." (Wolf 57). This almost sounds to me that Wolf is convincing his readers, "okay, maybe there have been losers. But look on the bright side; look at how much even the poorest countries have come so far since the dark age." I believe this kind of attitude has danger in itself as it lowers our threshold of what can be considered as improvement. For instance, just because Ethiopia now has several internationally (mostly by UK) funded hospitals in its capital, it does not rule out the reality that majority of population in rural areas are still suffering from curable diseases. Many developing countries have not advanced significantly even in comparison to its own past (i.e. Sierra Leone). Moreover, globalization has probably made it easier for LDCs (less developed countries) to compare their abject situation to the wealth of the northern hemisphere. Amidst the

2) Another point that was briefly brought up during the last week's class (but not discussed to my heart's content) was on China's participation in global economy. It was very interesting that both Wolf and Stiglitz cite China as their case in point for supporting their argument. According to Wolf's point of view, free trade is guaranteed to result in economic growth. China, as he argues, could boost their economy precisely because they opened their market to the international community. On the other hand, Stiglitz argues that success of economic liberalization depends on a set of restrictive and calculated political decisions. His assertion actually relates very nicely to professor Casey's Development Economics class that day (which conveniently was right before IPE). Professor Casey told me that China still pushes for very restrictive policies that limit foreign investment significantly. Although these practices go against the principle of economic liberalization, they have actually helped protect China's economy from the whim of global market. For instance, the Chinese government requires foreign investors go through an arduous process of contracting and further requires a non-negligible portion of their returns re-invested back in China, thus ensuring further growth. The government also strictly prohibits the flow of 'hot, short-term' capital flows into the country in order to prevent sudden withdrawal of capitals at any sign of financial crisis. At this point, it seems to me that Wolf is theoretically centered (maybe too much?), while Stiglitz is more political & practical oriented.