Stiglitz argues in this chapter that gradualist approaches that ignored the IMF’s shock therapy have ultimately seen greater success with deeper social reforms and better economic development. In other words, although the IMF believes its policies to have ultimately created a necessary evil in the short term, Stiglitz disagrees and believes there were alternative strategies that could have been pursued.

In this chapter, the author uses the successful cases of China and Poland to contrast the previous section on Russia’s failure. The main difference between China and Poland on one hand and Russia on the other is that the former countries focused on maintaining social stability rather than strictly stabilizing inflation (macroeconomic indices).

For example, China prioritized building a solid foundation to transition to a market economy before privatizing. Its government focused on creating jobs to fight unemployment, restructuring existing enterprises, installing social safety nets, and encouraging competition. It did not immediately privatize, nor did it democratize, instead allowing village enterprises and townships to generate wealth in their areas at the cost of accountability. As a result, China maintained its social capital, while in Russia, it eroded.

Ultimately, Stiglitz believes IMF’s vision was too narrow: It employed a very limited economic model and ignored dissenting voices.