Joseph Stiglitz is a Nobel Prize winner in economics, a former top white house advisor, a former chief economist at the World Bank and, most recently, author of “Globalization and the Discontents.” He spoke to IHT-TV’s Alan Friedman.

What is the message of “Globalisation and its Discontents”?

The real message here is that there is a grain of truth in a lot of the complaints about the way globalisation has evolved. But, globalisation can be a very powerful force for growth in the developing world. What I’m trying to argue in this book is that we have to change the way globalisation has been managed to ensure its benefits reach developing countries and poor people around the world.

What I got from the book was almost the view that globalisation in some ways has backfired and actually increased poverty.

In some places it has. In some places it has exposed countries to more volatility. In East Asia, for instance, the enormous disruption that occurred in ’97 and ’98 pushed many more people into poverty than had been previously the case. In Russia, the transition from communism to a market economy, because of its excessive reliance on what you might call the free market mantra, pushed an enormous amount of people into poverty - roughly two percent of the population to over forty percent.

There have been some real, marked failures. But it is also the case that in other parts of the world, like China, which has policies based on exports, globalisation has contributed to enormous growth. The fruits of that growth have been widely shared, so that poverty has been enormously reduced.

In your book, you say that the International Monetary Fund has failed in its mission, that the IMF has contributed to the problems associated with globalisation. How?

The IMF was created in the aftermath of the Great Depression and World War II, under the intellectual inspiration of Lord Keynes, to provide money for countries that were facing an economic downturn. The idea was to provide stimulus packages, in an expression we use in the United States, to expand their economies to maintain full employment.

The IMF has since pursued exactly the opposite policies. It has gone into East Asia, Argentina, and other countries insisting on austerity packages, insisting on cutting back expenditures, insisting on tightening. And the result has been economic downturns that have been turned into recessions, and recessions that have turned into depressions.

What are your recommendations for using globalisation to combat poverty?

The most important issue is to recognize the existence of a problem. The trade agreements that have been signed in the past, like the Uruguay Round in 1994, have been totally unbalanced. That agreement told the less developed countries that they had to eliminate subsidies, while the more advanced countries have been increasing their subsidies for agriculture.

We have to recognize the existence of this hypocrisy, this asymmetry, and recognize that, by and large, the rules of the game have been set by more advanced countries. More particularly, the rules are set by special interests within the more advanced industrial countries for their own benefit in ways that have disadvantaged the less developed countries.

Do you think that American President George W. Bush understands or cares about the globalisation issue?

I think that he is becoming aware of those aspects of the globalisation issue that impinge on the United States. Many of the people in the Bush administration have been quite articulate in expressing the view that countries without hope, where poverty prevails and young men cannot get jobs, provide feeding grounds for terrorism. If only for America’s self interest, something needs to be done.