The string of economic crises over the past two years in Asia, Russia and Brazil pushed the IMF into the spotlight and provoked waves of criticism, not simply from angry workers and students in the streets of some crisis countries but also from high-powered economists — like Jeffrey Sachs at Harvard and Paul Krugman at MIT — think tanks on both the left and right and nongovernmental watchdog groups. Even more surprising, criticism also came from the World Bank itself, especially senior vice president and chief economist Joseph Stiglitz.

While Stiglitz rarely mentioned the IMF by name, he very publicly attacked “the Washington consensus” that the IMF, backed by the United States Treasury Department, has tried to enforce around the world. The consensus is that poor countries that rely on IMF intervention are expected to adhere to a series of “structural adjustments” that are supposed to be implemented within three years. Those adjustments include balancing budgets (or run surpluses), cutting subsidies for food and other necessities, raising interest rates, privatizing as many functions as possible, reducing trade barriers, eliminating controls on foreign investment and focusing on increasing exports.

Stiglitz, a former Stanford professor who also served as chief of Clinton’s Council of Economic Advisors before taking the World Bank job, has argued that the IMF applies a one-size-fits-all solution in these countries without taking the country’s specific history and institutional development into account. What might work in the United States may not work in countries with much different political and economic cultures.

Stiglitz is particularly harsh on how the IMF acted in Russia after the fall of the Soviet Union. He called the reforms “an ideological, fundamental, root-and-branch approach to reform as opposed to an incremental, piecemeal, and adaptive approach.” He described the Western advisors — including the IMF — as “market Bolsheviks” who thought that simply because they had the right textbooks, they could instantaneously revolutionize society, much as the Bolsheviks in 1917. Also, “some economic cold-warriors seem to have seen themselves on a mission to level the ‘evil’ institutions of communism.” This approach — which elevated rapid privatization of state property above all other goals — halved Russia’s economic output in a decade, while China, pursuing a more incremental approach that emphasized competition more than privatization, doubled its output in the same period. While growth plummeted, inequality in Russia shot up, as the privileged few plundered the country, shipping capital out (through the Bank of New York, among other places) as the IMF was trickling money in.

“The failures of the reforms that were widely advocated go far deeper [than how the reforms were implemented in Russia] — to a misunderstanding of the very foundations of a market economy,” Stiglitz told a development economics conference last spring. “At least part of the problem was an excessive reliance on textbook models of economics.” Moreover, he said, “even the creation of a market economy should be viewed as a means to broader ends. It is not just the creation of a market economy that matters, but the improvement of living standards and the establishment of sustainable, equitable and democratic development.”

In Asia, Stiglitz blames much of the economic crisis on many countries’ decisions, strongly encouraged by the IMF and the United States, to open up their financial markets rapidly without proper regulation. Then partly because of shortcomings in the regulation of financial markets in such developed countries as Japan and the United States, too much short-term investment rushed in, then rushed out. The IMF demanded high interest rate, tight money policies, designed to lure those foreign investors back into Thailand, Indonesia and Korea. But those policies pushed fragile businesses into bankruptcy, wreaking havoc on what were flawed but still basically vibrant economies. Borrowers in these countries certainly made mistakes, Stiglitz said, but the lenders were just as much at fault. Moreover, the powerful rating agencies — like Moody’s — were doubly in error. Stiglitz argues that they failed to alert banks and investors to the increasingly risky financial condition of countries like Thailand, then after the crash turned around and exaggerated the risk of returning to those countries, simply to make themselves look less foolish.

“Many countries followed the dictums of liberalization, stabilization, and privatization, the central premises of the so-called Washington consensus, and still did not grow,” he told a United Nations conference late last year. Similarly most of the countries that have grown most successfully in the past quarter-century — in East Asia — rejected much of the Washington consensus, he noted.

Stiglitz has a different approach to economic development than many of the traditional macro-economist number crunchers. Development, he argues, involves the transformation of society, including such non-economic processes as improving the status of women, not just creation of pockets of wealth. Effective strategies to develop poor countries must have the support of the population and empower them. Imposing strict economic rules on countries, as the IMF does in its structural adjustment policies, “reinforces traditional hierarchical relationships” and creates a sense of impotence, Stiglitz claimed. People are more likely to accept and take part in reform “if there is a sense of equity, of fairness, about the development process,” Stiglitz said last year in Geneva. “By contrast,” he continued, taking a barely veiled shot at the IMF, “a decision to, say, eliminate food subsidies that is imposed from the outside, through an agreement between the ruling elite and an international agency, is not likely to be helpful in achieving a consensus — and thus in promoting a successful transformation.”

Occasionally, World Bank president James Wolfensohn either appears to rein in Stiglitz or distance himself slightly. (He recently referred to Stiglitz as a “free spirit.”) But most close observers think that the two men largely agree on broad outlines and that there is a real, if at times overstated, difference between the Bank and the IMF. The IMF defends its record but rarely attacks Stiglitz.

This is not the first time there has been tension: the IMF role has changed and greatly expanded since the 1970s and often encroached on the long-term development turf of the Bank. With their different histories, missions and constituencies within member governments, the two institutions should naturally disagree to some extent.

But over the past two decades the “Washington consensus” has prevailed and largely shut down debate, despite the hammering of citizen groups, environmentalists and advocates of the world’s poor against both the Bank and the IMF. Indeed, many of Stiglitz’s critiques also apply to the actual practices of the Bank. Despite its pledges to pay more attention to the poor, to the environment and to aspects of development other than growth, two-thirds of the Bank’s outstanding loans are in support of “structural adjustment” programs (though at times to cushion the harsh blows on the poor). Also, environmentalist and human rights groups are attacking two big Bank projects nearing final approval — a massive relocation of Chinese farmers into a fragile region designated an autonomous region for Tibetans and a huge oil pipeline from Chad through Cameroon that critics say will ravage rain forest and simply benefit corrupt elites in the two countries.

Experts say the increased debate may ultimately lead to a less monolithic approach to global economic reform. “The biggest significance [of the split between the IMF and the Bank] is the willingness of the Bank and Stiglitz to challenge the macroeconomic policies of the IMF,” observes Robert Naimann, a research associate at the Preamble Center, a progressive think tank in Washington. “They’ve been forced to debate, and that creates more space. It’s one thing when developing countries face the IMF alone, and people say there’s no alternative, and it’s another thing when there’s this wide open policy debate.”

Even Ian Vasquez, director of the Project on Global Economic Liberty at the ultra-free market Cato Institute, agrees that Stiglitz’s arguments have been “constructive.” “It shows how when you give an institution like the IMF so much influence it monopolizes development views,” he said, “and I don’t think that’s a good idea.” Likewise, even though Andrea Durbin, director of international programs at Friends of the Earth, thinks that Stiglitz hasn’t incorporated environmental issues enough into his model, she sees Stiglitz as a “revolutionary” and “anomaly” within the global banking circles. “What’s refreshing about Joseph Stiglitz is he calls it like he sees it,” Durbin said, “even when his own institution is going the wrong way. And that’s unusual for a man in his position.”

As the IMF and World Bank meet, government finance ministers and bank officials will be discussing such issues as debt relief for poor countries and dealing with bankers mad about a recent IMF decision to permit Ecuador to default on some debts. The wider debate that Stiglitz has opened on the meaning of development, the constructive role of government, the limits of the market and the need for democratic transformation will be addressed tangentially, at best. But the record of car crashes and false starts on the road to global economic well-being suggests that the engineers of both economic engines and highways need to listen to Stiglitz and other critics of the “Washington consensus,” then start considering some fundamentally different designs.

Last week, Krugman wrote a column attacking so-called “centrists” who defend the Paul Ryan budget plan and criticize the president for being too “partisan” about it. The column came a few days after Mr. Brooks defended the Paul Ryan budget plan and criticized the president for being too “partisan” about it.

Yesterday, former New York Times editor Bill Keller, who is now an opinion columnist despite his distinct lack of interesting opinions, attempted to defend the honor of centrists in a column in which he once again fundamentally misunderstands the argument against “centrism” as a philosophy: It depends entirely on finding the middle point between two extremes, and in our national politics right now, the middle point between two extremes is almost invariably “the Democratic Party agenda.” An ideological moderate has an ally in Barack Obama. The pathological centrist, on the other hand, dreams of a candidate whose beliefs are directly between Obama and Romney, even though such a candidate would be more conservative than “moderate.”

Keller defends his argument with research provided by “Third Way,” a centrist think tank dedicated to pushing the Democratic Party ever further to the right. According to “Third Way” polls, Democrats can only win by appealing to people exactly like the founders of Third Way: “pro-business” deficit hawks. “Pro-business” deficit hawks tend to be massively overrepresented in New York and Washington elite circles, so an argument that everyone else in America thinks the same way has a certain appeal to someone like Bill Keller. It is all bullshit: “Fiscally conservative, socially liberal” voters represent a slim minority of a slim minority of actual voters, even if they also represent a majority of newspaper and magazine editors.

Keller is maybe not the best example of the important role of the “centrist” in the American political arena, as he is one of those many “centrists” whose dedication to “centrism” led him to push for war against Iraq as a means of retaliating against an entirely different group of people who had attacked us on 9/11. The radical, extreme leftist view, at the time, was that maybe we don’t really need to invade and occupy Iraq, and many of those sage centrists now share that opinion.

Krugman, in a column published three days later, wrote:

Anyone who has tracked this issue over time knows what I mean. Whenever growing income disparities threaten to come into focus, a reliable set of defenders tries to bring back the blur. Think tanks put out reports claiming that inequality isn’t really rising, or that it doesn’t matter. Pundits try to put a more benign face on the phenomenon, claiming that it’s not really the wealthy few versus the rest, it’s the educated versus the less educated.

So what you need to know is that all of these claims are basically attempts to obscure the stark reality: We have a society in which money is increasingly concentrated in the hands of a few people, and in which that concentration of income and wealth threatens to make us a democracy in name only.

Hah, I wonder who those “pundits” are, don’t you? He went on:

In response, the usual suspects have rolled out some familiar arguments: the data are flawed (they aren’t); the rich are an ever-changing group (not so); and so on. The most popular argument right now seems, however, to be the claim that we may not be a middle-class society, but we’re still an upper-middle-class society, in which a broad class of highly educated workers, who have the skills to compete in the modern world, is doing very well.

It’s a nice story, and a lot less disturbing than the picture of a nation in which a much smaller group of rich people is becoming increasingly dominant. But it’s not true.

Oh, those usual suspects!

In today’s New York Times, Krugman’s column on the doomed supercommittee contains what I would characterize as a slightly off-topic tangent:

Oh, and let me give a special shout-out to “centrist” pundits who won’t admit that President Obama has already given them what they want. The dialogue seems to go like this. Pundit: “Why won’t the president come out for a mix of spending cuts and tax hikes?” Mr. Obama: “I support a mix of spending cuts and tax hikes.” Pundit: “Why won’t the president come out for a mix of spending cuts and tax hikes?”

You see, admitting that one side is willing to make concessions, while the other isn’t, would tarnish one’s centrist credentials. And the result is that the G.O.P. pays no price for refusing to give an inch.

These so-called “centrist” pundits sound pretty dumb, right? Here’s New York Times columnist Thomas Friedman, earlier this week:

Here we are in America again on the eve of a major budgetary decision by yet another bipartisan “supercommittee,” and does anyone know what President Obama’s preferred outcome is? Exactly which taxes does he want raised, and which spending does he want cut? The president’s politics on this issue seems to be a bowl of poll-tested mush.

How funny, this sounds a lot like what Paul Krugman’s unnamed idiot “centrist” pundit keeps saying.

To my knowledge, no one bothers to do this with Maureen Dowd columns, because she rarely makes arguments worth engaging with.

[Second example via Weigel]

First he quotes a famous question posed by Susan Sontag in 1982:

Imagine, if you will, someone who read only the Reader’s Digest between 1950 and 1970, and someone in the same period who read only The Nation or The New Statesman. Which reader would have been better informed about the realities of Communism? The answer, I think, should give us pause. Can it be that our enemies were right?

Then he offers his Krugman parallel:

Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? The answer, I think, should give us pause. Can it be that our enemies were right?

Frum’s point is interesting and provocative and I think it holds up. Yes, portions of the American left clung to unrealistic views of Soviet Communism in the ’50s and ’60s, and yes, the same can easily be said about the doctrinaire right’s dogma about economic policy in the first decade of this century.

But here’s where the parallel breaks down. Frum argues that Sontag’s question “contributed to the rise of a healthier, more realistic left much less tempted to make excuses for ‘progressive’ dictatorships than the left of the last generation.” But that’s because the American left changed its views in response to reality. There is precious little evidence that the conservative camp — outside of a few ostracized-and-excommunicated conservatives like Frum or Bruce Bartlett — has changed its views on economic issues one whit.

Far from it — they’ve doubled down! The federal tax burden has reached a 60-year low — and they are still pushing for further tax cuts. A deregulated financial sector contributed to the excesses that caused the financial crisis, and they’re still fighting, tooth-and-nail, every attempt at reregulation. History and economics tell us that cutting government spending in a period of low or negative economic growth runs a severe risk of slowing growth even further, and yet they’ve made deficit reduction their primary political goal.

In response to one of the greatest economic disasters in recent memory, the American Republican Party has become even more hard-line and rigid in its ideology. As one contemplates the very real possibility that the GOP could take both the White House and the Senate in the next election, that trend-line is a mite disconcerting.

Before party leaders Sunday night announced a debt ceiling deal that is “all spending cuts,” as House Speaker John Boehner described it, Krugman offered a grim analysis. He predicted that unemployment would rise again to nine percent again and that America will experience economic consequences comparable to Japan’s “lost decade,” (when an economic program of frugality hindered recovery from an asset bubble collapse in the 1990s).

Krugman criticized the debt negotiations:

Basically the Republicans said we’ll blow up the world economy unless you give us exactly what we want, and the President said OK. That’s what happened. . . . We’re having a debate in Washington which is all about, “we’re going to make this economy worse, but are we going to make it worse on 90 percent of the Republican’s terms or 10o percent of the Republican’s terms?” And the answer is 100 percent.

Watch Krugman’s appearance below, including a brief spat with conservative columnist, George Will:

For close followers of the political and economic scene, Krugman’s Obama critique is all too familiar: The stimulus should have been bigger, healthcare reform should have included a public option, the banks should have been nationalized, et cetera. Krugman staked out his position before Inauguration Day — Obama is insufficiently aggressive and ambitious — and he has stuck to it ever since. But for those on the left who are feeling a sense of outright betrayal, Krugman delivers a bit of a surprise:

Krugman has been suspicious of Obama since the beginning of the campaign, and his early doubts have remained. “It’s not so much — it’s not a values difference. I think Obama was and is committed to the welfare state.” What has always troubled him, Krugman says, is Obama’s conviction “that we can find the center and work with these people.” This seems to Krugman a deeply naive view of politics, though one that is pervasive in Washington. “There are really very, very few things, very few values issues on which both sides of our political divide agree,” he says. “You may in the end get an agreement that involves both parties but is not bipartisan in any positive sense of the word.”

The quote put me in mind of a telling moment during the conclusion of Obama’s speech on the deficit two weeks ago, when the president alluded to the partisan warfare that had plagued his term.

Of course, there are those who simply say there’s no way we can come together at all and agree on a solution to this challenge. They’ll say the politics of this city are just too broken; the choices are just too hard; the parties are just too far apart.

And then with a wry smile and downcast eyes, Obama said “And after a few years on this job, I have some sympathy for this view.”

It was a laugh line, but it was also an honest line — and just happened to be in a speech that contained the boldest articulation of Democratic values that Obama has made during his term so far. The president could have been speaking directly to Krugman. He was, in part, acknowledging Krugman’s point.

But who is really being naive here? Krugman’s position is that Obama starts too far to the right and leaves himself little negotiation room — that he reduces the politics of the possible. But you have to wonder whether Obama would have gotten any significant legislation accomplished if he had come out of the gate pushing for a much bigger stimulus, single-payer healthcare, and the nationalization of Citigroup.

Which scenario is more likely — the current Republican party buckling to Obama’s progressive vigor, or centrist Democrat senators fleeing for the hills, denying the White House 60 votes on any of its agenda items? I know where I’d lay my money down.

This is not to say that Obama couldn’t have demonstrated more leadership. It’s a fair criticism to argue that he too often allows his opponents to seize the initiative, and he hasn’t been forceful enough in articulating his own vision. That’s disappointing, but it’s not betrayal — it’s not evidence that Obama is some kind of conservative mole, destroying what remains of liberal America from within. And it should not be confused with the notion that had he been more explicitly radical he would have achieved more — that’s simply not guaranteed at all.

The two Democratic presidents who built the vast majority of the liberal welfare state we know today, Franklin Roosevelt and Lyndon Johnson, operated under dramatically different political dynamics than does Obama. Their majorities were far bigger, the partisan divide wasn’t set in concrete, and — especially important — the Senate was not a place that required a super-majority for every procedural step.

It’s also worth noting that Lyndon Johnson’s civil rights accomplishments were in large part responsible for the partisan reorganization of the United States that plagues us today — the demise of the liberal northern Republican and the migration of southern Democratic conservatives to the GOP. Obama’s tragedy may be that he is by nature a conciliator and a compromiser in an era that brooks no accommodation. But true disillusionment would require confidence that a different leader could have achieved much more. I think the opposite is more likely true — a different leader could have dug us into an even deeper hole.