Joseph Stiglitz.

• Author: Komisar, Lucy
• Position: Interview

Among the economic policy elite, Joseph Stiglitz is a heretic. he most prestigious critic of the International Monetary Fund (IMF) and the "Washington consensus," Stiglitz has voiced his views in the corridors of power. In 1993, he became a member of the President's Council of Economic Advisers, and later its chairman. In that role, he cautioned against free market "shock therapy" for Russia. Then, in 1997, he became chief economist of the World Bank, where he tried to push the institution in a more progressive direction. He also stepped up his criticisms of IMF and U.S. economic policies toward Russia and East Asia. These criticisms did not endear him to Treasury Secretary Lawrence Summers, who allegedly pushed him out of the World Bank in December.

Stiglitz is a giant among economists; peers assume he will win a Nobel Prize. When he was a junior at Amherst, the economics faculty met and decided that they had nothing more to teach him. One of them was deputized to call MIT to have him admitted to study there. After two years, he went to Oxford as a research fellow, then returned to MIT as assistant professor, and from there he went to Yale. Two years later, the Yale faculty voted to make him a full professor--at twenty-six. He has taught in Nairobi and at Stanford, Oxford, and Princeton. In his field, he helped create a new branch, the economics of information, and he is a leader in the economics of the public sector.

As chairman of the Council of Economic Advisers, Stiglitz was the highest official charged with analyzing the impact of economic policies on Americans. As chief economist of the World Bank, he was the top official responsible for analyzing how economic decisions affected the world's poor. He has been strategically placed to judge the winners and losers of global economic policies.

Stiglitz is an avuncular man of fifty-seven with close-cropped gray hair and a beard. He favors a loose gray V-necked sweater over a blue shirt and black pinstriped trousers. For a Washington official, he is astonishingly amiable and inspires warm affection, almost reverence, among his staff and close associates.

I spoke with Stiglitz several times in April. He was generous with his time, unpretentious, and genial. He tends to talk not in sound bites or cliches but in professorial explanations. I spoke with him for three hours and read over his recent speeches. Here is an edited transcript of his views.

Q: What was your reaction to the protests in April against the IMF and World Bank in Washington?

Joseph Stiglitz: I thought they were very effective in conveying the sense of values and concerns that a lot of young people, and people generally in the U.S., have beyond the narrow materialistic issues. They are concerned about poor people in developing countries, about democracy and democratic participation, governance issues, and the environment. There were people advocating protectionist issues, or who were more violent than I would approve of, but the point of marches is to convey a sense of values and concerns. How can one object to Americans caring about issues that go beyond our borders, to caring about poor people?

Q: What do you think of the call to shut down the IMF and the World Bank?

Stiglitz: The world needs an international development agency. I don't think anybody really thinks that one should get rid of the World Bank. Reform is one thing, but getting rid of it I think would be wrong. The IMF is a more complicated issue. I think there is a broad sentiment among both the left and the right that the IMF may be doing more harm than good. On the right, there's the view that it represents a form of corporate welfare that is counter to the IMF's own ideology of markets. But anybody who has watched government from the inside recognizes that governments need institutions, need ways to respond to crises. If the IMF weren't there, it would probably be reinvented. So the issue is fundamentally reform.

Q: The IMF has extraordinary powers to affect countries in times of crisis. Who does it represent? Who controls it?

Stiglitz: Finance ministers and central bank governors have the seats at the table, not labor unions or labor ministers. Finance...