The globalisation debate is typically seen as a clash of opposites: between the haves and the have-nots; the economic policy-making elite versus the rioters in Seattle and Geneva; and exploited developing nations pitted against the rapacious first world. Joseph Stiglitz bridges these divides. Formerly Bill Clinton's chief economic adviser and the chief economist of the World Bank, he comes from the heart of the Washington financial establishment. Yet he is a hero to stone-flinging anti-globalisers and a scourge of his former colleagues in the corridors of power. Stiglitz is no anti-capitalist red-ragger. He believes in global commerce, but opposes the dogma that markets can create prosperity without robust public institutions. He is an academic economist who writes in an accessible style, with authority born of policy-making experience and venerable academic credentials. Now a professor at New York's Columbia University, he has previously held posts at Yale, Oxford, Stanford and Princeton. In 2001, Stiglitz shared the Nobel Prize for Economics. The award was widely seen as overdue recognition of Stiglitz's pioneering work on 'information economics'; he argues that the market is beset with asymmetrical and imperfect information that impedes economic growth - flaws he envisages the state remedying. Stiglitz, 65, says he doesn't see his academic career as separate from his coal-face work. 'Much of what I did at the World Bank concerned the appropriate balance between the market and the state. That grew out of my work on imperfect information,' he says. In his three years at the bank he maintained an academic's refusal to compromise his ideas, finally resigning under pressure in 2000. 'They said I could stay but that I wouldn't be able to talk freely. When I went to the bank that was my one condition. I said: 'I'm not a spokesperson. I'm not a press person.'' From his experiences came Globalisation and Its Discontents (2002), a withering assault on the International Monetary Fund (IMF) that sold more than a million copies and spawned a sequel, Making Globalisation Work (2006). Infuriating his erstwhile associates, Stiglitz argued that the IMF devastates developing economies with its one-size-fits-all deregulation regime. 'If I'd been proven wrong, I would have been forgiven. But to have pointed out the flaws - in the strategy, for instance, in addressing the crisis in East Asia, and the way they were mismanaging the transition of Russia and other countries to market economies - was unforgiveable.' The IMF aired its grievances during a debate with Stiglitz in 2002. Both parties agreed to restrict the discussion to substantive issues and avoid ad hominem attacks, but the fund went for Stiglitz's jugular. After insisting the discussion be off the record, the IMF's chief economist, Ken Rogoff, immediately sent his remarks to the press as an open letter to Stiglitz. 'Having seen the underhanded ways they operate in developing countries I should have expected that kind of behaviour, but I wasn't prepared for the extent of it,' Stiglitz says. 'Everybody was scandalised.' Most intolerable was Stiglitz's suggestion that officials were sometimes rewarded for peddling pro-privatisation policies by walking out of the IMF into lucrative positions on Wall Street. Stiglitz noted the former deputy managing director of the IMF, Stan Fischer, left to enjoy a plum berth at Citigroup. In the letter Rogoff accused Stiglitz of slander for 'implying Citibank may have dangled a job offer in front of him in return for his co-operation in debt renegotiations'. Stiglitz's social conscience emerged early. The son of a schoolteacher mother and insurance salesman father, he grew up in the industrial city of Gary, Indiana, and was shaped by the social inequality and frequent labour strikes he observed there. He 'saw some of the aspects of the market economy where things were not working well'. Stiglitz attended an all-white school, while his mother was the sole white teacher at an exclusively black school. At Amherst College in the early 1960s he immersed himself in the civil rights movement and attended the rally at which Martin Luther King declared 'I have a dream'. Although initially a physics major he switched to economics because it allowed him to apply his love of mathematics to social issues. After completing his PhD at the Massachusetts Institute of Technology, he became professor of economics at Yale at 26. Stiglitz left the ivory tower for the White House in 1993. In The Roaring Nineties (2003), his account of the Clinton 'boom' years, Stiglitz questioned the Clinton administration's occasional subservience to big business. He criticised its failure to reform accountancy standards, 'reforms that might have avoided the Enron/Worldcom scandals'. But he says that Clinton, 'relative to what preceded and what followed, has to be viewed as A-plus'. Stiglitz says Clinton did his best given the Republican control of Congress. 'When he got into office he talked about putting people first and investments in infrastructure. The political realities didn't give him the scope to do what he wanted.' Stiglitz continues to influence the political arena. In 2006, he co-wrote a paper with Harvard academic Linda Bilmes estimating the overall cost of the Iraq conflict will be from US$1 trillion to US$2 trillion. Surprisingly, no one in the Bush administration substantially challenged his numbers. 'Their main argument was, 'We don't go to war on the basis of green eye-shaded calculations.' Our response was, 'This is a war of choice and American citizens have a right to know how much they're spending to determine whether they're getting what they think they ought to be getting.' The second argument was that we haven't talked about the benefits. We were not convinced there were benefits.' Recently, Stiglitz and Bilmes published The Three Trillion Dollar War. Despite adding $1 trillion to their previous calculations they insist the tally is conservative. 'When we first wrote our paper there had been almost no discussion of the costs,' he says. 'In addition to the operational costs there were the costs of treating soldiers, disability payments, health-care costs, the costs born by the families of the troops and the costs to the economy.' Stiglitz says the costs of the war have been obscured by the US government's method of 'cash accounting', which logs only present costs and ignores long-term expenses. For example, in purchasing cheap military vehicles, the defence budget would not take into account the future costs of treating veterans injured as a result, or the costs of replacing the dilapidated equipment. He charges the US administration with being poorly prepared for war veterans, who often return home to face inadequate medical services, overwhelming red tape and long delays in the processing of their disability claims. The funds for veterans' medical care in the 2005 budget were based on data from 2002, before the war began. 'No matter what your view of the war, everybody thinks that those who fight for a country ought to be treated better than they have been treated,' says Stiglitz. He does not believe war should be funded by borrowing, arguing current taxpayers should bear the costs of their politician's decisions rather than passing them on to future generations. But the US is already feeling the bite of the administration's extravagant spending. 'America is a very rich country, so the issue is not whether we're going to be pushed over the brink. The question is the opportunity cost. The median American income today is lower than seven years ago. The money spent on the war could have made a very big difference to the standard of living.' The government's failure adequately to prepare for the war has meant lavishing funds on private contractors to compensate for its over-stretched army. In 2007, US army sergeants received annual salaries of up to US$69,350, while security guards employed by private companies, such as Dyncorp and Blackwater, earned as much as US$455,000. But the problem of private contractors isn't just economical: mercenaries are motivated by profit rather than the national interest. 'Privatisations of the military are never a good thing. The contractors want to keep the costs as low as possible, but one of the social objectives in our intervention in Iraq should have been to make sure unemployment was kept down. But while the Iraqis were unemployed our contractors were bringing in Nepalese and Filipinos to work. As the economy went down it fed the insurgency; as the insurgency strengthened it made it difficult for the economy to function. The administration said Iraq's economy was about to blossom. That certainly hasn't happened yet.' The administration has compounded costs by awarding no-bid contracts, arguing that competitive bidding, although necessary to secure the best deal for taxpayers, would be too time-consuming given the urgency of war. 'This argument might have made some sense for the months immediately surrounding the invasion, but hardly seems compelling years after,' observes Stiglitz. The no-bid contracts create a situation ripe for conflicts of interest: witness the exorbitant payments to Halliburton, formerly the home of defence secretary Dick Cheney. Moreover, the administration offers 'cost-plus' contracts, reimbursing the expenses of the defence contractors and thereby encouraging them to spend highly in order to increase profits. In Stiglitz's view, the administration has avoided scrutiny by financing the war through 'emergency' funding. Emergency funds are not subject to the usual budget caps and require lesser standards of justification and congressional review. Stiglitz argues that Congress should restrict the use of emergency funds to the first year of a war. 'Five years after a war, it's no longer an emergency. It should be planned - or something's going wrong.' Name: Joseph Stiglitz Genre: economics Latest book: The Three Trillion Dollar War (2008) Current project: more academic research on markets with 'imperfect information'. Age: 65 Home: New York Family: married with four children Other books: Globalisation and Its Discontents (2002), The Roaring Nineties (2003), Making Globalisation Work (2006) Other jobs: academic, adviser to Bill Clinton, chief economist of the World Bank. What the papers say: 'A great tour of the complexities of policy-making. Getting a top economist to subject the US Treasury and the IMF to withering scrutiny ... is good for the long-term health of the system.' Financial Times on Globalisation and Its Discontents Author's bookshelf Imperial Life in the Emerald City: Inside Iraq's Green Zone by Rajiv Chandrasekaran 'This gripping book reveals how poorly prepared the US was to handle Iraq after the invasion.' The Price of Liberty: Paying for America's Wars from the Revolution to the War on Terror by Robert D. Hormats 'Hormats explains how the financing of wars affects how they are fought, won and lost.' Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism by Chang Ha-joon 'Chang simplifies economic theory ... and shows how and why the policies advocated by the IMF and, at times, the World Bank, have failed developing countries.' Collapse: How Societies Choose to Fail or Succeed by Jared Diamond 'A fascinating account of the collapse of civilisations around the world and a grim reminder of what happens when countries choose to ignore the environmental impact of growth.'