On November 23, Joseph Stiglitz, the World Bank‚s Chief Economist and an outspoken critic of the so-called "Washington Consensus," announced his resignation. Speculation that he had actually been fired sprung up immediately, based on long-standing reports that Secretary of the Treasury Lawrence Summers and others in his department had long been furious with his outbursts of candor about the effects of International Monetary Fund (IMF) and World Bank structural adjustment policies. In an interview published by the New York Times on December 2, Stiglitz said that "working from the inside was not leading to [timely] responses" and that he had decided that with policies "as misguided as I believe these policies were, you have to either speak out or resign."

Stiglitz‚s uncontested acknowledgment that he could not continue to speak out as he has and remain at the Bank shreds any thought that the international financial institutions are serious about opening themselves up to new ideas. This is important to keep in mind as the IMF re-names its Enhanced Structural Adjustment Facility (ESAF) the "Poverty Reduction and Growth Facility" and claims that its programs will now be more humane because they will have input and oversight from the World Bank.

Stiglitz‚s presence as the World Bank Chief Economist had been an entertaining puzzle for Bank-watchers. Bank President James Wolfensohn pointed to Stiglitz‚s frank critiques of IMF programs as evidence of the institution‚s openness to ideas at odds with the reigning orthodoxy. At the same time, reports from within the Bank suggested that outside his own office, Stiglitz wielded little influence over Bank policies. Indeed, the Bank‚s devotion to structural adjustment has changed little despite Stiglitz‚s attacks on the "Washington Consensus" ˆ the extreme neo-liberal philosophy adopted by the World Bank, IMF, U.S. Treasury Department and regional development banks in the early 1980s that held that countries in economic straits should implement austerity programs and raise interest rates to control inflation at all costs. In a January 1998 speech, Stiglitz called the Washington Consensus "neither necessary nor sufficient, either for macro-stability or longer-term development" and "hardly complete and sometimes misguided."

Stiglitz assumed the position of World Bank Chief Economist in February 1997. Before that, he chaired President Clinton‚s Council of Economic Advisers. His reputation as an academic economist has long been secure, having written several standard texts and developed theories that many believe make him a likely candidate for the Nobel Prize in Economics. His willingness to criticize the policies imposed by his own institution and the IMF became clear with his January 1998 speech in Helsinki attacking the Washington Consensus, after which Stiglitz suddenly became unavailable to the press. Reports at the time indicated that the Treasury Department, and in particular Summers, who was then Deputy Secretary, had requested that he be silenced.

He subsequently emerged from his exile to engage the Bank‚s sister institution, the IMF, in a significant debate in December 1998 by issuing a report that, while delicately refraining from naming the IMF, attacked its response to the East Asian financial crises of 1997-98. At a press conference on the occasion of the report‚s issuance, he called the insistence on raising interest rates in the East Asian economies ˆ the main policy of the IMF during the crisis ˆ "bad psychology and worse economics." He succinctly analyzed the intentions and results of the interest rate hikes: "You ask the question, ŒWho are you protecting?‚ You‚re protecting firms that have gambled [on currency rates]. Who is paying the price? Workers who are going to be put out of jobs."

The degree of outrage sparked by Stiglitz‚s remarks at the press conference could be measured by the fact that Wolfensohn felt it necessary to put out a press release the next day contending that the journalists gathered had misconstrued Stiglitz as criticizing the IMF. Wolfensohn said of the World Bank‚s attitude toward the IMF: "We support them and are grateful for the irreplaceable role that they play. [∑] My single purpose is to strengthen this most valuable of partnerships."

But of course we should not start to think that Stiglitz could have been some sort of "savior." As Patrick Bond, an economist at the University of the Witwatersrand (South Africa), points out, Stiglitz, like another well-known dissenter, Jeffrey Sachs, is a consummate reformist, someone who believes that limited capital controls like those used in Malaysia may be a good idea, and that fighting inflation through raising interest rates is not always as important as creating or maintaining employment. But in the end his quarrels with more orthodox figures at the IMF or World Bank amount, says Bond, to little more than "elite fights between hostile brothers." Stiglitz never questions the logic of the neo-liberal economic system per se, and apparently believes it can be made just ˜ or just enough ˜ with reforms that are, in practice, in Bond‚s words, "capricious and shallow." The danger, then, is that positions like Stiglitz‚s ˜ particularly if they come close to being accepted by the powerful ˜ can all too easily co-opt some progressives who might believe that change has finally come. Such reforms, however, are far more likely to simply provide cosmetic cover for the worst excesses of neo-liberal policies without in any way challenging the structural injustices of the current economic system. Despite Wolfensohn‚s insistence that Stiglitz will continue to advise him on an informal basis, and will head up the search committee for his replacement, his departure probably means that the danger of the Bank fooling its critics has lessened considerably.

Regardless of whatever dangers might have been posed by his voice of relative sanity at the World Bank, many will miss having a voice of dissent in such a senior position within the institution. Recent interviews suggest, however, that Stiglitz will hardly be silent; indeed as he returns to Stanford University he can now play the role of well-informed critic speaking with the authority of a "former World Bank Chief Economist" about the wretched excesses of the harsh brand of neo-liberalism practiced at the Bank and IMF. As an early indication, the Financial Times reported on November 29 that he has published an article in the UK‚s Royal Economic Society Economic Journal asserting "that the policy of Œconditionality‚ is flawed and may have undermined democracy in countries receiving loans." Stiglitz is reported to insist instead that "countries should be encouraged to arrive at a national consensus to create their own strategies for development." Such analysis from a figure of Stiglitz‚s prominence can only be helpful in the struggle to end structural adjustment.