The book draws on Stiglitz's personal experience as chairman of the Council of Economic Advisers under Bill Clinton from 1993 and chief economist at the World Bank from 1997.
This approach seeks to minimize the role of government—arguing that lower wages solve problems of unemployment, and relying upon trickle-down economics (the belief that growth and wealth will trickle down to all segments of society) to address poverty.
Joseph Stiglitz was awarded the 2001 Nobel Memorial Prize in Economic Sciences (shared with George Akerlof and Michael Spence) for demonstrating how information affects markets.
Without equal access to information between employer and employee, company and consumer, or (in the IMF's case) lender and debtor, there is no chance of "free" markets operating efficiently.
Without government oversight, they reach decisions without public debate and resolve trade disputes involving "uncompetitive" or "onerous" environmental, labor, and capital laws in secret tribunals—without appeal to a nation's courts.
Privatization without land reform or strong competitive policies resulted in crony capitalism, large businesses run by organized crime, and neo-feudalism without a middle class.
There is no doubt that monetary aid/lending could have an important and effective role in advocating country efforts to sustain external shocks and improve economic status but without strong forefront progress on the policy, the aid of balance of payments help could very well be counterproductive.
This destabilized entire developing economies by causing massive inflows of 'hot' short-term investment capital; then when inflation rose, the IMF's loan conditions imposed fiscal austerity and dramatically rising interest rates.
As a result, Third World citizens carried much of the costs and few of the benefits of IMF loans, and a moral hazard ensued among the financial community: foreign creditors made bad loans, knowing that if the debtors defaulted, the IMF would pick up the tab (see Long Term Capital Management, whose overexposure in Southeast Asia might have brought down international financial markets without a massive bailout).
Stiglitz believes the IMF and World Bank should be reformed, not dismantled—with a growing population, malaria and AIDS pandemics, and global environmental challenges, Keynes' mandate for equitable growth is more urgent now than ever.
He advocates a gradual, sequential, and selective approach to institutional development, land reform and privatization, capital market liberalization, competition policies, worker safety nets, health infrastructure, and education.
Since the IMF loans primarily benefited foreigners and government officials, he argues it is unjust and onerous that citizens of developing nations be heavily taxed to pay them off.
The North, EU and US achieved bilateral conventions called Blair House Agreement to circumscribe the regulations imposed on subsidization of agriculture, leading to the failure of Uruguay round and exposing developing countries to greater risk and volatility.
He argues that populist anti-globalization movements such as that of the Trump presidency, while accurately identifying certain negative effects of free trade agreements (e.g. NAFTA, which lowered prices for American consumers at the cost of local manufacturing jobs) other aspects of their critiques are flawed as are their prescriptions.
Stiglitz notes how Trump framed the United States as the victim of globalization, when it fact, many of the specific agreements his campaign took issues with were instigated at the behest of the US, primarily to its benefit, or at least, the benefit of the American business community, who, in the case of NAFTA, offshored large swathes of the US manufacturing base to the developing world, taking advantage of weaker regulatory and taxation regimes and cheap, non-unionized labour.
Stiglitz is sympathetic to the grievances of the working classes in the developed world with respect to globalization, but sees right-wing populism as unlikely to provide substantial solutions.
He argues that Trump’s proposed rewriting of NAFTA and imposition of 65% tariffs on Chinese goods, in addition to being in practice very difficult to enact, would have worsened the plight of the very groups they were intended to benefit.
"[7] The influential New York Review of Books stated that "Joseph Stiglitz [...] has made incisive and highly valued contributions to the explanation of an astonishingly broad range of economic phenomena, including taxes, interest rates, consumer behavior, corporate finance, and much else.
Especially among economists who are still of active working age, he ranks as a titan of the field," concluding that "Stiglitz’s book will surely claim a large place on the public stage.
"[11] Daniel T. Griswold of the libertarian think tank Cato Institute labels the book a "score-settling exercise distorted by the author's own political prejudices and personal animus."
Stiglitz demonstrates this belief by "prais[ing] Malaysia for spurning IMF advice ... by imposing capital controls to stem the flight of short term flows."
Griswold concludes by arguing that Stiglitz "distorts the history of the East Asian Miracle", while with Russian privatisation he "ignores the fact that Russia's initial reforms were timid and half baked" and that the IMF with its beliefs in bail outs and non-market exchange rates is not the "great symbol of market fundamentalism".