Global speculators: a billionaire and a Nobel laureate want to fix international trade agencies. Why bother?

• Author: Oliver, Charles
• Position: George Soros on Globalization - Globalization and Its Discontents - Book Review

George Soros on Globalization, by George Soros, New York: PublicAffairs, 191 pages, $20

Globalization and Its Discontents, by Joseph E. Stiglitz, New York; W.W.Norton & Co., 282 pages, $24.95

WHEN THE INTERNATIONAL Monetary Fund (IMF) and World Bank held joint meetings in Washington, D.C., in September, nothing remarkable happened. Given the recent struggle over globalization, that was news. Starting with the 1999 meeting of the World Trade Organization (WTO) in Seattle, meetings of international groups concerned with trade and economic development attracted thousands of protesters, some of them violent. They aimed to make themselves heard, even if that meant stopping these organizations from doing business. Violence, property damage, and clashes with police became expected features of the anti-globalization movement.

But that was before September II, 2001. Protests planned for the 2001 IMF-World Bank meeting in D.C. were canceled, and some observers said the anti-globalization movement was dead.

Organizers of the 2002 protests hoped to show their movement was very much alive and announced that 20,000 protesters would show up. But the police and the public are still much less tolerant of the behavior protesters displayed in Seattle and other cities. The September meetings in Washington drew barely 2,000 protesters, who quickly found themselves outnumbered and out-maneuvered by police. Property damage was limited to a single smashed window and some graffiti.

But globalization criticism hasn't gone away. Indeed it has gained some support from surprising quarters, including prominent businessmen and respected economists. These more economically literate critics point to some very real problems with the way globalization has taken place. In particular, they focus on the problems caused by organizations such as the World Bank and the IMF. Unlike the street demonstrators, these critics don't call for a halt to globalization and economic integration. They sunplywant it to be guided by right-minded individuals. But their criticisms of the institutions charged with guiding economic integration carry more power than they seem to realize, calling into question the very prescriptions they put forth.

Financier George Soros certainly understands a thing or two about how markets work. (In December a French court convicted the billionaire of insider trading and fined him $2.3 million.) And he certainly understands how trade helps nations become wealthier. In George Soros on Globalization, he admits, albeit in a footnote, that a World Bank study found developing countries with the biggest increases in trade as a share of gross domestic product have experienced higher and faster growth compared to their "pre-globalization" years as well as to "non-globalizing countries.

"Globalization," Soros writes, "is indeed a desirable development in many ways." But Soros is a strong critic of globalization, at least as it has taken place so far. He gives three basic reasons: "First, many people, particularly in less developed countries, have been hurt by globalization without being supported by a social safety net; many others have been marginalized by global markets. Second, globalization has caused a misallocation of resources between private goods and public goods. Markets are good at creating wealth but are not designed to take care of other social needs. The heedless pursuit of profit can hurt the environment and conflict with other social values. Third, global financial markets are crisis prone."

For Soros, the real problem with globalization is that it hasn't gone far enough. "While markets have become global, politics remain firmly rooted in the sovereignty of the state," he complains. He proposes that we strengthen existing international organizations and create new ones devoted to "social goals such as poverty reduction and the provision of public goods on a global scale."

For example, Soros notes that "workers in the countries that offer cheap labor are often...