Free market heretics.

George Soros on Globalization By George Soros PublicAffairs. 191 pages. $20.00.

Globalization and Its Discontents By Joseph E. Stiglitz W.W. Norton & Company. 282 pages. $24.95.

Globalization is not benefiting the worlds poor. The International Monetary Fund (IMF) serves the interests of Wall Street. The free market system is amoral. Richer nations, especially the United States, need to be far more generous in their aid-giving.

These assertions may seem self-evident to many progressives, but oh, what joy when both a Nobel Prize-winning former chief economist of the World Bank and a billionaire former currency trader express them. The cheerleaders of corporate-imposed globalization can dismiss neither of these authors as marginal anti-capitalist cranks.

This is not the first time that Soros and Stiglitz have expressed doubts about "market fundamentalism" and the U.S.-imposed "Washington Consensus" on the developing world and former communist countries. Stiglitz has been critical of it ever since his days at the World Bank from 1997 to 2000, and his heretical views reportedly led then-Secretary of the Treasury Lawrence Summers to get him fired.

Soros has recast himself as the thinking person's capitalist and a major philanthropist in recent years, after making tons of money by speculating on currencies. He has become a prolific writer, expounding in several articles and books his thesis that unless capitalism has some moral underpinnings it has the potential to tear society apart.

Stiglitz's and Soros's current books arrive at a propitious moment. Globalization has received several body blows this year. The collapse of Argentina, once a star pupil of the international financial institutions, was a direct hit. So were the financial scandals on Wall Street. After all, the IMF had been lecturing countries to have "transparent" markets like those in the United States, but after Enron and WorldCom this turned out to be a bad joke. Even that journal of elite opinion, The New York Times, is beginning to question globalization, notably in columns by Paul Krugman and in an August 18 Sunday magazine cover story ("The Free-Trade Fix," by Tina Rosenberg). It's a wonderful time for Soros and Stiglitz to bolster the side of the angels.

Stiglitz's book is a sustained blast at the IMF and, by association, the U.S. Treasury Department, which, according to Stiglitz, dictates IMF policies. In chapter after chapter, he slams the IMF for its mishandling of recent crises, from the Russian meltdown in 1998 to the East Asian troubles that started in 1997. He sharply criticizes various aspects of the institution, from its opaqueness to its arrogance, from its ideological bankruptcy and subservience to Wall Street to its unwillingness to adopt pro-poor policies such as job creation, land reform, and better financial regulation. Stiglitz worked at the World Bank during these crises, interacting with IMF officials, and he uses his first-person knowledge to bolster his prosecutorial case.

When he joined the World Bank, Stiglitz says, "I knew the tasks would be difficult, but I never dreamed that one of the major obstacles the developing countries faced was manmade, totally unnecessary, and lay right across the street--at my `sister' institution, the IMF."

Stiglitz acknowledges that while globalization, broadly defined, has brought many benefits, the current global economic system is damaging democracy. "Countries are effectively told that if they don't follow certain conditions, the capital markets or the IMF will refuse to lend them money," he writes. "They are basically forced to give up part of their sovereignty, to let capricious capital markets--including the speculators whose only concerns are short-term rather than the long-term growth of the country and the improvement of living standards--`discipline' them, telling them what they should and should not do."

He states flatly that the IMF's policies are designed to ensure that commercial banks get their loans repaid and that markets get pried open around the World.

He is not subtle in the metaphors he uses to denounce the IMF. "Modern high-tech warfare is designed to remove physical contact: Dropping bombs from 50,000 feet ensures that one does not `feel' what one does," he writes. "Modern economic management is similar: From one's luxury hotel one can callously impose policies about which one would think twice if one knew the people whose lives one was destroying."

He offers real-life alternatives to the IMF's prescriptions. He uses numerous examples, ranging from India and China to Malaysia and Botswana, to show how different approaches--such as restricting currency trading, promoting local industries, and prioritizing job creation--can work.

My main criticism of this book is that Stiglitz barely takes on the World Bank. He suggests that the World Bank, especially under current president James Wolfensohn, is quite a different institution, being much more participatory and sensitive in its approach. It perhaps is asking too much to ask Stiglitz to be as disapproving of the organization he worked at as he is of its sister institution. But I wish he had the courage to be bolder in his reach.

Nevertheless, Stiglitz offers a number of suggestions to make globalization work better for the world's indigent. His proposals range from the relatively arcane, such as bankruptcy reform and better developed insurance markets for risk management, to the more far-reaching, such as debt relief and greatly increased international aid-giving. He thinks that there should be global institutions to tackle collective problems such as environmental issues and AIDS. He argues for a change in the voting system at international financial institutions and a much greater level of transparency.

The alternative to Wall Street-induced globalization is not necessarily a complete withdrawal from the world market, he contends. "Globalization can be reshaped," he says, "and when it is, when it is properly, fairly run, with all countries having a voice in policies affecting them, there is a possibility that it will help create a new global economy in which growth is not only more sustainable and less volatile, but the fruits of this growth are more equitably shared."

Soros's book is a bit of a bore in comparison. Not that it doesn't contain some useful proposals. But his self-importance gets in the way.

"I believe I have some unusual qualifications for this project," he writes in the preface. "I have been a successful practitioner in global financial markets, giving me an insider's view of how they operate. More to the point, I have been actively engaged in trying to make the world a better place. I have set up a network of foundations devoted to the concept of open society.... I am only one of many experts on financial markets, but my active concern with the future of humanity sets me apart from most others."

Even so, when was the last time you heard the likes of Jack Welch or Michael Eisner say, "Taxing capital and curbing the monopolistic aspirations of multinational companies are undoubtedly two of the most challenging tasks of our age"?

Soros makes a crude equation between what he calls the "market fundamentalists on the far Right and anti-globalization activists on the far Left" and sets out to rescue the global financial institutions from both.

The centerpiece of the book is his proposal concerning the use of a currency issued by the IMF called Special Drawing Rights (S.D.R.s) to greatly enhance aid to the developing world. Unfortunately, the proposal, well-meaning as it is, is arcane in the extreme. (Bono reportedly didn't think it would sell because it doesn't rhyme.) As Soros explains it, "S.D.R.s are international reserve assets issued by the IMF to its members and convertible into other currencies. Less-developed countries would add their S.D.R.s to their monetary reserves; richer countries ... would donate their allocations according to certain rules. Less-developed countries would benefit both directly through the addition to their monetary reserves and indirectly from the provision of goods on a global scale."

Initially, such funds would be devoted to public health, education, narrowing the digital divide, and judicial reform, Soros says. Subsequent programs could take it from there.

Soros thinks S.D.R.s would be a better route to take than revamping the World Bank and IMF. His reform proposals for the IMF are so tepid as to not even be worth mentioning. "I do not see any point in proposing more radical solutions when the authorities are not ready to consider even the moderate ones outlined here," he writes. "To ask for an even playing field is utopian; there never has been one. But it is not too much to ask to make the playing field less uneven; that would serve the interests of all parties."

But he does not make a convincing case for the richer nations accepting his own proposal for Special Drawing Rights.

The final chapter is a curious add on that Soros wrote post-September 11, a section he says he came close to leaving out of the book. The segment doesn't have much to do with globalization and instead deals with how to combat terrorism and how the Bush Administration's approach is not that way. Soros's instinct was correct: The chapter doesn't belong in this work.

Stiglitz's and Soros's books are not perfect. Stiglitz's writing suffers from an overdose of indignation, while Soros's is pompous. And the feasibility of the proposals in both books can be contested.

The larger question here is whether it is better to reform globalization so that it works for a larger proportion of the world's population or whether nations should opt out of the system altogether. That debate has been raging since at least the time of the dependency theorists (most famous among them being Andre Gunder Frank), many of whom argued in the 1960s and 1970s that the way for developing countries to do best for their people was to delink from the global economy.

Stiglitz and Soros come down squarely on the side of reform, a stance that may disappoint some critics of globalization. But they carry the debate forward. Theirs is a vision of a global economic system that would be much more humane and just than the current one. For this reason, and for the unusual resumes of the authors, the books are worth your attention.

Amitabh Pal is Editor of The Progressive Media Project.