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The Challenge of Global Capitalism
Many individuals proclaim that global capitalism is here to stay. Unfettered markets, they argue, now drive the world, and all countries must adjust, no matter how painful this may be for some. Robert Gilpin, author of the widely acclaimed Political Economy of International Relations (Princeton, 1987), urges us, however, not to take an open and integrated global economy for granted. Rather, we must consider the political circumstances that have enabled global markets to function and the probability that these conditions will continue. Gilpin's new book amounts to a magisterial inquiry into all major aspects of the contemporary world political economy. Beginning with the 1989 end of the Cold War and the subsequent collapse of communism, it focuses on globalization and rapid technological change and covers a broad sweep of economic developments and political cultures. Gilpin demonstrates the fragility of a global and integrated economy and recommends what can be done to strengthen it.
The international community has another chance to solidify the global market economy that collapsed with the outbreak of World War I. Yet, writes Gilpin, the full implications of this historic development for international affairs are not yet clear. Will socialist economies make a successful transition to market-type economies? What role will a dynamic China play in the world economy? Will the United States continue to exercise leadership or gravitate toward self-centered policies? Gilpin explores such questions along with problems in the areas of trade liberalization, multinational corporations, and destabilizing financial flows. He also investigates the struggles of less developed countries and the spread of economic regionalism, particularly in Europe, North America, and Pacific Asia, which directly threatens an open world economy.
The author maintains that global capitalism and economic globalization have rested and must continue to rest on a secure political foundation. However, this foundation has eroded since the end of the Soviet threat. To ensure survival of the global economy, Gilpin concludes, the United States and other major powers must recommit themselves to working together to rebuild its weakened political foundations.
The international community has another chance to solidify the global market economy that collapsed with the outbreak of World War I. Yet, writes Gilpin, the full implications of this historic development for international affairs are not yet clear. Will socialist economies make a successful transition to market-type economies? What role will a dynamic China play in the world economy? Will the United States continue to exercise leadership or gravitate toward self-centered policies? Gilpin explores such questions along with problems in the areas of trade liberalization, multinational corporations, and destabilizing financial flows. He also investigates the struggles of less developed countries and the spread of economic regionalism, particularly in Europe, North America, and Pacific Asia, which directly threatens an open world economy.
The author maintains that global capitalism and economic globalization have rested and must continue to rest on a secure political foundation. However, this foundation has eroded since the end of the Soviet threat. To ensure survival of the global economy, Gilpin concludes, the United States and other major powers must recommit themselves to working together to rebuild its weakened political foundations.
392 pages, Hardcover
First published January 1, 2000
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January 27, 2024
two fans of the book
Gilpin is a soft realist, and he seems too much a fan of globalization for my tastes, and i just don't agree with his economic views or see why he's so many issues with Kenneth Waltz and his realism.
Gilpin just leans too heavily on trade, economics and globalization, and the hope of stability far too much for my tastes.
And well, in the international system you have power hungry states, and countries that dominate things militarily and economically and regionally, and institutions are not all they are cracked up to me, or people who hold up their hopes for lots of military or economic stability.
Basically the challenges are much bigger than Gilpin expects with how smoothly national interests and unstable markets, and international interventions work out to smooth things over.
I think at least he shows some of the flaws in the system, to wake up the Kool-Ade drinkers though!
Every time the AMC Gremlin stalls, Gilpin to the rescue saying, he knows what's wrong and can fix the flaws.
oh yeah, according to him the whole Economic System falls apart unless you have a strong guy pulling all the strings, England before the war, and America after the war.
Everything political and economic will be peachy!
but it's Huntington and Mearsheimer who keep warning people about the kick in the ass.
........
As someone said about Gilpin
"Gilpin convinces when he argues that the development of the world economy after World War II can only be understood in light of the geopolitical order in which it was embedded. But he founders when he attempts to apply this notion to the 1990s. Uncomfortably for his argument, developing countries embraced openness precisely when the Cold War ended and the geopolitical basis for the U.S.-dominated international order fell apart. "
Checkmate!
..........
Gilpin was an influential figure in the fields of international relations theory and international political economy.
A "soft" realist, Gilpin argued that international economic affairs reflected state power, and that states' security interests shaped international economic cooperation.
He was a proponent of what would become known as Hegemonic stability theory, the notion that the international system is most likely to be stable in the presence of a hegemon.
..........
Other views of hegemonic stability - Neorealist interpretation
Neorealists have been focusing on this theory recently, the main proponent of it being John J. Mearsheimer who is trying to incorporate it into 'offensive realism'.
In his book The Tragedy of Great Power Politics Mearsheimer outlines how the anarchic system that neorealists subscribe to (see Kenneth Waltz for original theory) creates power hungry states who will each attempt to install themselves as regional and global hegemons.
The system is created, shaped and maintained by coercion.
The hegemon would begin to undermine the institution when it is not in their interests. With the decline of a hegemon, the system descends into instability.
..........
The Challenge of Global Capitalism describes the opportunities, the complexities, and the risks inherent in the globalized economy with the clarity and breadth of analysis characteristic of Robert Gilpin. His cool and balanced appraisal is a needed antidote to the sense of triumphalism that characterizes too much of American thinking at the end of the century. Required reading for students of political economy.
Paul A. Volcker
The Challenge of Global Capitalism is an authoritative review of the major aspects of today's world political economy by the world's leading political scientist working on the subject. It offers a clear description of a whole array of contemporary issues, a sustained critique of the economist's viewpoint―the most cogent by a political scientist of which I am aware―and some genuinely new material for scholars and students. All of this is explained through the author's distinctive perspective.
Robert O. Keohane
.............
a glowing review that points out why i'm not a fan of this one
Don't fear Globalization, just fix it.
10/10
In The Challenge of Global Capitalism Robert Gilpin asserts:
"The Achilles heel of the post-Cold War world order is the poor public understanding of economic liberalism, of the functioning of the market system, and of how capitalism creates wealth."
That heel was showing in Seattle during the WTO meetings last November and again April 16-17 in Washington when in-your-face, "Globalize-This!" protestors tried to block IMF and World Bank meetings. The protestors would serve themselves and their causes well by reading Gilpin's book, which explains how the global economy has developed over the last half-century to reach the current stage of globalization, defined by Gilpin as "the increasing linkage of national economies through trade, financial flows, and foreign direct investment by multinational firms."
Globalization holds great potential for good and presents serious challenges.
The principal challenge, according to Gilpin, is to find ways to fortify the international financial system against future threats to global economic stability like those caused by the East Asian economic crisis and resulting global economic turmoil of the late 1990s.
Although economists and Western governments are not in agreement on all the specific measures to adopt to prevent international financial crises in the age of globalization, most do expect the IMF to play a necessary, constructive role in behalf of international financial stability.
Gilpin educates about globalization, but not as an apologist. Rather, he is quick to point out globalization's faults and to call for corrective measures.
Gilpin insists "the fears arising from globalization must be addressed and must not be rejected out of hand."
In the United States this means "solutions must be devised for the problems of growing income inequality, the plight of low-skilled workers, and job insecurity. Reforms should include strengthened safety nets, greatly expanded job training, and a new social contract between capital and labor."
Johnny Lovewisdom
..........
A lukewarm review from the Amazone
To Free Global Capitalism or Too Free?
6/10
The main benefit of this book is to provide an overview of international economic forms of cooperation in the 20th century.
That overview is, however, flawed by simplifications that often distort rather than illuminate that historical view.
The argument about what must be done next is incomplete and unsatisfying.
This book is written for the reader who has some college-level training in economics, and is interested in the interaction between national politics and international economics.
The basic argument is that free markets create excesses which can only be eliminated by international intervention. Such interventions were frequent and reasonably effective during the period just prior to World War I and in the free world after World War II.
Professor Gilpin argues that parochial American leadership since the end of the cold war has undermined the international political system for stabilizing the international economy. He calls for stronger American leadership in forging a better coalition with the European Union countries and Japan.
The central thesis of the book is sound in one area: Unrestrained capital flows can create distortions in a world in which everything else (businesses, people, and trade flows) are not nearly so unrestrained. The problem here is that these rapid capital flows out of a country primarily occur because of years of earlier abuses (as I describe in The Irresitible Growth Enterprise) such as speculative spending on infrastructure and investments that are not needed (as happened in several Southeast Asian countries prior to their currency crises in 1998).
Virtually every problem that Professor Gilpin warns against and wants to solve with international authority is really created by poor national economic policies. We would probably create sounder world economic growth if we focused on encouraging all nations to pursue sound lending, appropriate national borrowing, and constructive trade policies (our attention is usually focused on the last). Where governments are weak or corrupt, abuses will always develop and linger.
My counterargument would be that strong democracies will almost always pursue reasonably sound economic policies.
Solve that problem of governmental form and effectiveness of political process at the national level, and the world economy will be sound. If this counterargument is right, then we may need a second generation of informational efforts in favor of effective democracy, in the same way that one was needed during the cold war through Radio Free Europe and Voice of America.
At another level, much of what is described here as weaknesses and problems can be attributed to weak currencies.
Again, informational efforts and research could help countries with weak currencies appreciate how to strenthen those currencies. Certainly, pegging to stronger currencies is proving to be effective in many cases. Pegging to a basket of stronger currencies might work even better. There could even be a role for pegging to sound economic policies to change expectations, as some South American countries have done.
Many of the worldwide risks today relate to the U.S. trade imbalance. In the same way that greater public awareness and an economic boom led to eliminating the U.S. budget deficits, the trade imbalance can be solved.
Again, this is a national issue, not an international one. The weak savings rate in the U.S. can also be solved by changing the tax laws, again at a national level.
Basically, the argument I am making is that the markets are having problems because national politics are impinging too much on free markets. In that regard, the free market of ideas that is democracy can then adjust the national politics to achieve more healthy, free market results. The U.S. should lead the way by improving the savings rate and reducing the trade deficit. That would take many of the strains off of the world economy, and create the basis for another ten years of economic boom in the United States. Can our U.S. politicians get together and work on this after the November election? I certainly hope so.
Another area where Professor Gilpin is misfocused is in his concern about the growth of trading blocs like the EU and NAFTA. Actually, these blocs are creating freer markets within them and are an unavoidable precursor to creating the same level of freedom internationally with all countries. If there were three trading blocs in the world, they would simply merge into one at some point. That would be progress.
Complexity science tells us that having many countries pursuing their own ideas of economic prosperity will work better than having an internationally coordinated system. And the more intelligent, responsive, and focused those countries are, the better the whole system will work.
After you have finished reading this book, can you think of other places where we rely on precedent too much in our thinking rather than potential? If you find any of this happening in your own thinking, how can you learn to seek out better solutions rather than simply aping past solutions?
Donald Mitchell
Gilpin is a soft realist, and he seems too much a fan of globalization for my tastes, and i just don't agree with his economic views or see why he's so many issues with Kenneth Waltz and his realism.
Gilpin just leans too heavily on trade, economics and globalization, and the hope of stability far too much for my tastes.
And well, in the international system you have power hungry states, and countries that dominate things militarily and economically and regionally, and institutions are not all they are cracked up to me, or people who hold up their hopes for lots of military or economic stability.
Basically the challenges are much bigger than Gilpin expects with how smoothly national interests and unstable markets, and international interventions work out to smooth things over.
I think at least he shows some of the flaws in the system, to wake up the Kool-Ade drinkers though!
Every time the AMC Gremlin stalls, Gilpin to the rescue saying, he knows what's wrong and can fix the flaws.
oh yeah, according to him the whole Economic System falls apart unless you have a strong guy pulling all the strings, England before the war, and America after the war.
Everything political and economic will be peachy!
but it's Huntington and Mearsheimer who keep warning people about the kick in the ass.
........
As someone said about Gilpin
"Gilpin convinces when he argues that the development of the world economy after World War II can only be understood in light of the geopolitical order in which it was embedded. But he founders when he attempts to apply this notion to the 1990s. Uncomfortably for his argument, developing countries embraced openness precisely when the Cold War ended and the geopolitical basis for the U.S.-dominated international order fell apart. "
Checkmate!
..........
Gilpin was an influential figure in the fields of international relations theory and international political economy.
A "soft" realist, Gilpin argued that international economic affairs reflected state power, and that states' security interests shaped international economic cooperation.
He was a proponent of what would become known as Hegemonic stability theory, the notion that the international system is most likely to be stable in the presence of a hegemon.
..........
Other views of hegemonic stability - Neorealist interpretation
Neorealists have been focusing on this theory recently, the main proponent of it being John J. Mearsheimer who is trying to incorporate it into 'offensive realism'.
In his book The Tragedy of Great Power Politics Mearsheimer outlines how the anarchic system that neorealists subscribe to (see Kenneth Waltz for original theory) creates power hungry states who will each attempt to install themselves as regional and global hegemons.
The system is created, shaped and maintained by coercion.
The hegemon would begin to undermine the institution when it is not in their interests. With the decline of a hegemon, the system descends into instability.
..........
The Challenge of Global Capitalism describes the opportunities, the complexities, and the risks inherent in the globalized economy with the clarity and breadth of analysis characteristic of Robert Gilpin. His cool and balanced appraisal is a needed antidote to the sense of triumphalism that characterizes too much of American thinking at the end of the century. Required reading for students of political economy.
Paul A. Volcker
The Challenge of Global Capitalism is an authoritative review of the major aspects of today's world political economy by the world's leading political scientist working on the subject. It offers a clear description of a whole array of contemporary issues, a sustained critique of the economist's viewpoint―the most cogent by a political scientist of which I am aware―and some genuinely new material for scholars and students. All of this is explained through the author's distinctive perspective.
Robert O. Keohane
.............
a glowing review that points out why i'm not a fan of this one
Don't fear Globalization, just fix it.
10/10
In The Challenge of Global Capitalism Robert Gilpin asserts:
"The Achilles heel of the post-Cold War world order is the poor public understanding of economic liberalism, of the functioning of the market system, and of how capitalism creates wealth."
That heel was showing in Seattle during the WTO meetings last November and again April 16-17 in Washington when in-your-face, "Globalize-This!" protestors tried to block IMF and World Bank meetings. The protestors would serve themselves and their causes well by reading Gilpin's book, which explains how the global economy has developed over the last half-century to reach the current stage of globalization, defined by Gilpin as "the increasing linkage of national economies through trade, financial flows, and foreign direct investment by multinational firms."
Globalization holds great potential for good and presents serious challenges.
The principal challenge, according to Gilpin, is to find ways to fortify the international financial system against future threats to global economic stability like those caused by the East Asian economic crisis and resulting global economic turmoil of the late 1990s.
Although economists and Western governments are not in agreement on all the specific measures to adopt to prevent international financial crises in the age of globalization, most do expect the IMF to play a necessary, constructive role in behalf of international financial stability.
Gilpin educates about globalization, but not as an apologist. Rather, he is quick to point out globalization's faults and to call for corrective measures.
Gilpin insists "the fears arising from globalization must be addressed and must not be rejected out of hand."
In the United States this means "solutions must be devised for the problems of growing income inequality, the plight of low-skilled workers, and job insecurity. Reforms should include strengthened safety nets, greatly expanded job training, and a new social contract between capital and labor."
Johnny Lovewisdom
..........
A lukewarm review from the Amazone
To Free Global Capitalism or Too Free?
6/10
The main benefit of this book is to provide an overview of international economic forms of cooperation in the 20th century.
That overview is, however, flawed by simplifications that often distort rather than illuminate that historical view.
The argument about what must be done next is incomplete and unsatisfying.
This book is written for the reader who has some college-level training in economics, and is interested in the interaction between national politics and international economics.
The basic argument is that free markets create excesses which can only be eliminated by international intervention. Such interventions were frequent and reasonably effective during the period just prior to World War I and in the free world after World War II.
Professor Gilpin argues that parochial American leadership since the end of the cold war has undermined the international political system for stabilizing the international economy. He calls for stronger American leadership in forging a better coalition with the European Union countries and Japan.
The central thesis of the book is sound in one area: Unrestrained capital flows can create distortions in a world in which everything else (businesses, people, and trade flows) are not nearly so unrestrained. The problem here is that these rapid capital flows out of a country primarily occur because of years of earlier abuses (as I describe in The Irresitible Growth Enterprise) such as speculative spending on infrastructure and investments that are not needed (as happened in several Southeast Asian countries prior to their currency crises in 1998).
Virtually every problem that Professor Gilpin warns against and wants to solve with international authority is really created by poor national economic policies. We would probably create sounder world economic growth if we focused on encouraging all nations to pursue sound lending, appropriate national borrowing, and constructive trade policies (our attention is usually focused on the last). Where governments are weak or corrupt, abuses will always develop and linger.
My counterargument would be that strong democracies will almost always pursue reasonably sound economic policies.
Solve that problem of governmental form and effectiveness of political process at the national level, and the world economy will be sound. If this counterargument is right, then we may need a second generation of informational efforts in favor of effective democracy, in the same way that one was needed during the cold war through Radio Free Europe and Voice of America.
At another level, much of what is described here as weaknesses and problems can be attributed to weak currencies.
Again, informational efforts and research could help countries with weak currencies appreciate how to strenthen those currencies. Certainly, pegging to stronger currencies is proving to be effective in many cases. Pegging to a basket of stronger currencies might work even better. There could even be a role for pegging to sound economic policies to change expectations, as some South American countries have done.
Many of the worldwide risks today relate to the U.S. trade imbalance. In the same way that greater public awareness and an economic boom led to eliminating the U.S. budget deficits, the trade imbalance can be solved.
Again, this is a national issue, not an international one. The weak savings rate in the U.S. can also be solved by changing the tax laws, again at a national level.
Basically, the argument I am making is that the markets are having problems because national politics are impinging too much on free markets. In that regard, the free market of ideas that is democracy can then adjust the national politics to achieve more healthy, free market results. The U.S. should lead the way by improving the savings rate and reducing the trade deficit. That would take many of the strains off of the world economy, and create the basis for another ten years of economic boom in the United States. Can our U.S. politicians get together and work on this after the November election? I certainly hope so.
Another area where Professor Gilpin is misfocused is in his concern about the growth of trading blocs like the EU and NAFTA. Actually, these blocs are creating freer markets within them and are an unavoidable precursor to creating the same level of freedom internationally with all countries. If there were three trading blocs in the world, they would simply merge into one at some point. That would be progress.
Complexity science tells us that having many countries pursuing their own ideas of economic prosperity will work better than having an internationally coordinated system. And the more intelligent, responsive, and focused those countries are, the better the whole system will work.
After you have finished reading this book, can you think of other places where we rely on precedent too much in our thinking rather than potential? If you find any of this happening in your own thinking, how can you learn to seek out better solutions rather than simply aping past solutions?
Donald Mitchell
April 23, 2023
Some of my reaction overlaps with the only other written review of this book, as of right now – namely that Robert Gilpin’s writing style is quite plodding and that large portions of this book remain relevant even 24 years later. There are multiple repetitions of the exact same concepts, ideas, suggestions and speculations to a point where I would already know what the author is about to say, which made the book perhaps three times as long as it should have been.
This book is a very good summary of the challenges of global capitalism, which form one complex challenge to make this system work for a better world. It provides a great platform and tools for scholars in political science, economics and international finance interested in international relations – the mentioning of the Bretton Woods System, and how it was created and developed, what happened after the abolishment of the fixed exchange rates, how different ideologies view global capitalism and what the author thinks about them, how and why East Asian countries especially Japan are less willing to allow imports and foreign direct investments especially from the United States while heavily exporting to the United States and generating large trade surpluses, to name a few.
This book is a very good summary of the challenges of global capitalism, which form one complex challenge to make this system work for a better world. It provides a great platform and tools for scholars in political science, economics and international finance interested in international relations – the mentioning of the Bretton Woods System, and how it was created and developed, what happened after the abolishment of the fixed exchange rates, how different ideologies view global capitalism and what the author thinks about them, how and why East Asian countries especially Japan are less willing to allow imports and foreign direct investments especially from the United States while heavily exporting to the United States and generating large trade surpluses, to name a few.
April 13, 2013
Large portions of this book remain relevant 14 years after its original publication. The preface and final chapter provide a broad based overview of key issues within globalization. The sections on French and German thoughts / psychology with respect to the formation of the Eurozone were most interesting. I also liked the chapter on Asian Regionalism.
The drawback of this book, in addition to the 1999 dated material, is the plodding pace of the writing. I appreciate the painstaking effort the author makes to describe technical ideas. Unless a reader is using this book for class study, it would be better to read more contemporary efforts, such as the works of Krugman and Friedman, with Diamond thrown in for good measure.
The drawback of this book, in addition to the 1999 dated material, is the plodding pace of the writing. I appreciate the painstaking effort the author makes to describe technical ideas. Unless a reader is using this book for class study, it would be better to read more contemporary efforts, such as the works of Krugman and Friedman, with Diamond thrown in for good measure.
Displaying 1 - 3 of 3 reviews