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The Globalization Paradox: Democracy and the Future of the World Economy
Surveying three centuries of economic history, a Harvard professor argues for a leaner global system that puts national democracies front and center. From the mercantile monopolies of seventeenth-century empires to the modern-day authority of the WTO, IMF, and World Bank, the nations of the world have struggled to effectively harness globalization's promise. The economic narratives that underpinned these eras―the gold standard, the Bretton Woods regime, the "Washington Consensus"―brought great success and great failure. In this eloquent challenge to the reigning wisdom on globalization, Dani Rodrik offers a new narrative, one that embraces an ineluctable tension: we cannot simultaneously pursue democracy, national self-determination, and economic globalization. When the social arrangements of democracies inevitably clash with the international demands of globalization, national priorities should take precedence. Combining history with insight, humor with good-natured critique, Rodrik's case for a customizable globalization supported by a light frame of international rules shows the way to a balanced prosperity as we confront today's global challenges in trade, finance, and labor markets.
368 pages, Hardcover
First published December 23, 2010
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About the author
Dani Rodrik
85 books267 followersDani Rodrik is the Rafiq Hariri Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University. He lives in Cambridge, Massachusetts.
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March 7, 2022
Először talán illik tisztázni, mi is az a globalizáció. Nos, se több, se kevesebb, mint hogy a dolgok a lehető legkevesebb tranzakciós költséggel áramolhassanak, miközben az mondják az országhatároknak, hogy: piha. No most a „dolgok” sokfélék lehetnek, érthetünk alattuk munkaerőt, információt, kulturális produktumokat, de itt és most értsünk alatta pénzt és árucikkeket. No most a klasszikus neoliberális érvelés szerint nincs is annál jobb, mint mikor a tőke szabadon rohangál. Ez ugyanis azt jelenti, hogy korlátozás nélkül eljut onnan, ahol felesleg van belőle, oda, ahol hiánycikk, és hopp, máris befektetés lesz belőle, amiből mindenki profitál. Az árucikkek akadálytalan cirkulációja is remek, hiszen elősegíti az optimális munkamegosztást. Ha Kelet-Burdisztánban gránátalmát tudnak olcsón termeszteni, Nyugat-Burdisztánban meg rizst (mert ott jóval csapadékosabb az időjárás), akkor a kelet-burdisztániak ne tököljenek a rizstermesztéssel (ami náluk sokkal rosszabb hozamot produkál, tehát nagyobb költséggel tudnak előállítani egy kilót belőle, mint szomszédaik), a nyugat-burdisztániak meg hagyják a francba a gránátalmafákat – inkább koncentráljanak a saját erősségeikre, aztán töröljék el a vámokat, így mindkettejüknek jut rizs is, gránátalma is megfelelő mennyiségben és kedvező áron. Mindez abszolút értelmes okfejtés, és – Rodrik sem tagadja – hálásak lehetünk érte a globalizációnak. (Megjegyzem, globalizáció nélkül olcsó banán sem lenne, meg mandarin. Mi lenne velünk egész télen!) Ugyanakkor a neolib közgazdászok azon állítása, hogy ezek az előnyök mindenki számára érezhetőek lesznek, valamiért mégsem valósult meg. Erre a neolib közgazdászok azt mondják, azért, mert nem elég a globalizáció, Rodrik viszont tamáskodik. És a tamáskodás könyvet eredményez.
Az egyik baj az, hogy a globalizáció nem egyenlő felek közti interakció, és a folyamat hajlamos a már meglévő egyenlőtlenségeket konzerválni, sőt, felerősíteni. Ugyanis az az ország, aki nagy tőkével és remek infrastruktúrával száll be a bizniszbe, előnyben lesz azzal az országgal szemben, aki nem tud mást felajánlani, mint nyersgyapotot vagy pár wolframbányát. Előbbi fogja diktálni az árakat, és sosem fog annyit fizetni, hogy az a társadalom széles rétegeihez leszivárogjon – cserébe viszont valami no-name diktátor Oxfordba küldheti a suhancait. Ahhoz, hogy a szóban forgó szegény ország felzárkózhasson, többre lenne szükség, például arra, hogy kialakulhasson valamiféle feldolgozóipar (ez az első lépcsőfok*), ám az van, hogy ez nem mindig érdeke a feleknek. A diktátornak azért nem, mert neki tökéletesen megfelel, ha csak az ő suhancai jutnak el Oxfordig – ha a nép is oda járatná a gyerekeit, még a végén megokosodnának, és abból csak a baj van. A fejlett nyugati ország pedig úgy van vele, hogy a franc se akar konkurenciát teremteni saját magának, maradjon csak az a szegény ország a messzi távolban puszta nyersanyag-szolgáltató. Mindezek tükrében nem csoda, ha a centrum és a periféria közti különbség nemhogy csökkent volna az elmúlt évtizedekben, hanem még nőtt is**.
A másik probléma meg az, hogy a globalizációnak nincs gazdája. Ha valamit elszúr, nincs kit megbüntetni, mert nem létezik olyan transznacionális testület, amely el tudná számoltatni. A nemzetállamok feje fölé pozicionálja magát, viszont amikor szart kavar, az a nemzetállamon csapódik le: ha összeomlik egy ország gazdasága, abba nem az USA-ban székelő bankigazgató, hanem az adott állam kormánya bukik bele. Bár a közgazdászok szeretnének megfeledkezni erről, de tény: a globalizáció nem pusztán közgazdasági kérdés, hanem kőkemény belpolitika. És ha egy közgazdász képtelen meggyőzni egy demokratikus ország választóit, hogy az ő elképzelései duzzasztják meg a népi pénztárcákat, akkor a hajára kenheti azokat. Persze más a helyzet a diktatúrák esetén – ott elég a diktátort meggyőzni. A nép meg kit érdekel.
És ezzel el is érkeztünk Rodrik sokat emlegetett, közgazdasági körökben közhellyé patinásodott „trilemmájáig”. A szerző ugyanis arra a következtetésre jut, hogy három dolog nem működhet egyszerre: a demokrácia, a hiperglobalizáció és a nemzeti szuverenitás. Az egyiket mindenképpen fel kell áldoznunk – de melyiket, kérdi a tanácstalan olvasó. Nézzük a lehetőségeinket:
1.) Felejtsük el a nemzeti szuverenitást, és koncentráljunk a globalizációra és a demokráciára. Ezt nagyjából akkor tudnánk elérni, ha létrehoznánk egy nemzetek feletti „világkormányt”, aki képes lenne kontroll alatt tartani a globalizáció hátulütőit. Megbüntetné a szabályszegőket, gondoskodna a globális igazságosságról. Ez egy szép gondolat, de Rodrik nem sok esélyt lát rá, legalábbis a közeli jövőben. Az EU példáját hozza fel, ami tulajdonképpen az efféle integrációnak a tesztüzeme. És hát látjuk, hogyan döcög. Holott olyan országokat tömörít, akik igazából nem is különböznek olyan sokban egymástól*** – hát képzeljük el, hogyan is hozhatnánk közös nevezőre olyan teljesen eltérő anyagi helyzetben lévő és kultúrájú államokat, mint mondjuk Uganda, Katar, Kína vagy Kolumbia?
2.) Hagyhatjuk lógva a globalizációt, és erősíthetjük a demokráciát és a nemzeti szuverenitást. Alapvetően ez az elv lett mainapság a legnépszerűbb politikai szlogen, amit a populizmus is zászlajára tűzött. Azonban a populizmus mindezt egyfajta identitásküzdelem keretében hirdeti meg, ráadásul kissé álságosan, ugyanis hajlamos kacsintgatni a harmadik pont felé...
3.) ...ami nem más, mint hogy rágyúrunk a nemzeti szuverenitásra és a globalizációra, és ezzel párhuzamosan nekiállunk leépíteni a demokráciát. Mert ugye ha nincs demokrácia, akkor saját állampolgárainkat kiváló, olcsó munkaerőként tudjuk felajánlani a multinacionális vállalatoknak, akik örömmel építenek ide összeszerelő-üzemet. Ha pedig még ennek tetejében a munkavállalói jogokat is megnyirbáljuk, a szakszervezeteket leépítjük, akkor országunk tényleg paradicsoma lesz a különböző gigacégeknek.
Rodrikot én a három opció közül leginkább még a másodikhoz pozicionálnám. De kellő óvatossággal. Mert egész fejtegetésének az a veleje, hogy ne higgyünk a mindenre jó csodaszerekben. Nincsenek tökéletes elméletek: vannak elgondolások, amiket helyesnek érzünk, de muszáj menet közben korrigálni őket. A hiperglobalizáció pont ilyen elmélet: kipróbálták, vannak előnyei, ezeket meg is kell őrizni, de ne féljünk belátni a hibákat és kijavítani őket. Ha látjuk az út közepén a kátyút, kerüljük ki, mert eltörik a kardántengely. A neoliberális globalizációpárti közgazdászokkal az a legnagyobb baj, hogy sündisznók: egy dolgot tanultak meg nagyon, mindenáron azt akarják ráerőltetni a valóságra. Rodrik ezzel szemben róka. A róka több dolgot tud a sünnél, talán egyiket se tökéletesen, de képes arra, hogy a valóságra reflektáljon, és azt a képességét vegye elő, amelyik az adott helyzetben leginkább alkalmazható. És a gyorsan átalakuló, új információktól hemzsegő világban bizony rókákra van szükség. Én is róka akarok lenni.
Ui.: kifejezetten élvezetesen megírt közgazdasági szöveg, amiért külön hálás vagyok. Köszi, Dani, hogy olvasmányos vagy.
Ui2.: és persze köszönöm e könyvet annak, aki karácsonyra meglepett vele, mert figyel rám.
* A beavatkozáspárti politika a fejlődő országokban először a demokratikus intézményeket teremtené meg, és azoktól várja a gazdasági megugrást. Azonban úgy fest, a demokratikus intézmények megfelelően erős középosztály nélkül nem tarthatóak fenn, ám az erős középosztály csak a gazdasági fejlődés eredményeképp alakulhat ki.
** Vannak persze látszólagos sikertörténetek - ezek közül leginkább a kínai gazdasági csodát szokták emlegetni. Ugyanakkor Kína pont azért tud sikeres lenni, mert a globalizáció neki svédasztal, amiről csak a neki tetsző dolgokat pakolja a tányérra. Saját termékeivel elárasztja a világpiacot, élvezve a neoliberalizmus áldásait, de más országok termékeit protekcionista módon kizárja saját piacáról, ezzel védve saját iparát a versenytől. Ilyen értelemben Kína a globalizáció potyautasa.
*** Az EU leggazdagabb és legszegényebb állama között a szorzó csak 3, a világ leggazdagabb és legszegényebb állama között viszont 19. Magyarán akármennyire is meg vagyunk szomorodva a saját anyagi helyzetünkön, anyagi értelemben még mindig a világ felső 10%-ának a része vagyunk.
Az egyik baj az, hogy a globalizáció nem egyenlő felek közti interakció, és a folyamat hajlamos a már meglévő egyenlőtlenségeket konzerválni, sőt, felerősíteni. Ugyanis az az ország, aki nagy tőkével és remek infrastruktúrával száll be a bizniszbe, előnyben lesz azzal az országgal szemben, aki nem tud mást felajánlani, mint nyersgyapotot vagy pár wolframbányát. Előbbi fogja diktálni az árakat, és sosem fog annyit fizetni, hogy az a társadalom széles rétegeihez leszivárogjon – cserébe viszont valami no-name diktátor Oxfordba küldheti a suhancait. Ahhoz, hogy a szóban forgó szegény ország felzárkózhasson, többre lenne szükség, például arra, hogy kialakulhasson valamiféle feldolgozóipar (ez az első lépcsőfok*), ám az van, hogy ez nem mindig érdeke a feleknek. A diktátornak azért nem, mert neki tökéletesen megfelel, ha csak az ő suhancai jutnak el Oxfordig – ha a nép is oda járatná a gyerekeit, még a végén megokosodnának, és abból csak a baj van. A fejlett nyugati ország pedig úgy van vele, hogy a franc se akar konkurenciát teremteni saját magának, maradjon csak az a szegény ország a messzi távolban puszta nyersanyag-szolgáltató. Mindezek tükrében nem csoda, ha a centrum és a periféria közti különbség nemhogy csökkent volna az elmúlt évtizedekben, hanem még nőtt is**.
A másik probléma meg az, hogy a globalizációnak nincs gazdája. Ha valamit elszúr, nincs kit megbüntetni, mert nem létezik olyan transznacionális testület, amely el tudná számoltatni. A nemzetállamok feje fölé pozicionálja magát, viszont amikor szart kavar, az a nemzetállamon csapódik le: ha összeomlik egy ország gazdasága, abba nem az USA-ban székelő bankigazgató, hanem az adott állam kormánya bukik bele. Bár a közgazdászok szeretnének megfeledkezni erről, de tény: a globalizáció nem pusztán közgazdasági kérdés, hanem kőkemény belpolitika. És ha egy közgazdász képtelen meggyőzni egy demokratikus ország választóit, hogy az ő elképzelései duzzasztják meg a népi pénztárcákat, akkor a hajára kenheti azokat. Persze más a helyzet a diktatúrák esetén – ott elég a diktátort meggyőzni. A nép meg kit érdekel.
És ezzel el is érkeztünk Rodrik sokat emlegetett, közgazdasági körökben közhellyé patinásodott „trilemmájáig”. A szerző ugyanis arra a következtetésre jut, hogy három dolog nem működhet egyszerre: a demokrácia, a hiperglobalizáció és a nemzeti szuverenitás. Az egyiket mindenképpen fel kell áldoznunk – de melyiket, kérdi a tanácstalan olvasó. Nézzük a lehetőségeinket:
1.) Felejtsük el a nemzeti szuverenitást, és koncentráljunk a globalizációra és a demokráciára. Ezt nagyjából akkor tudnánk elérni, ha létrehoznánk egy nemzetek feletti „világkormányt”, aki képes lenne kontroll alatt tartani a globalizáció hátulütőit. Megbüntetné a szabályszegőket, gondoskodna a globális igazságosságról. Ez egy szép gondolat, de Rodrik nem sok esélyt lát rá, legalábbis a közeli jövőben. Az EU példáját hozza fel, ami tulajdonképpen az efféle integrációnak a tesztüzeme. És hát látjuk, hogyan döcög. Holott olyan országokat tömörít, akik igazából nem is különböznek olyan sokban egymástól*** – hát képzeljük el, hogyan is hozhatnánk közös nevezőre olyan teljesen eltérő anyagi helyzetben lévő és kultúrájú államokat, mint mondjuk Uganda, Katar, Kína vagy Kolumbia?
2.) Hagyhatjuk lógva a globalizációt, és erősíthetjük a demokráciát és a nemzeti szuverenitást. Alapvetően ez az elv lett mainapság a legnépszerűbb politikai szlogen, amit a populizmus is zászlajára tűzött. Azonban a populizmus mindezt egyfajta identitásküzdelem keretében hirdeti meg, ráadásul kissé álságosan, ugyanis hajlamos kacsintgatni a harmadik pont felé...
3.) ...ami nem más, mint hogy rágyúrunk a nemzeti szuverenitásra és a globalizációra, és ezzel párhuzamosan nekiállunk leépíteni a demokráciát. Mert ugye ha nincs demokrácia, akkor saját állampolgárainkat kiváló, olcsó munkaerőként tudjuk felajánlani a multinacionális vállalatoknak, akik örömmel építenek ide összeszerelő-üzemet. Ha pedig még ennek tetejében a munkavállalói jogokat is megnyirbáljuk, a szakszervezeteket leépítjük, akkor országunk tényleg paradicsoma lesz a különböző gigacégeknek.
Rodrikot én a három opció közül leginkább még a másodikhoz pozicionálnám. De kellő óvatossággal. Mert egész fejtegetésének az a veleje, hogy ne higgyünk a mindenre jó csodaszerekben. Nincsenek tökéletes elméletek: vannak elgondolások, amiket helyesnek érzünk, de muszáj menet közben korrigálni őket. A hiperglobalizáció pont ilyen elmélet: kipróbálták, vannak előnyei, ezeket meg is kell őrizni, de ne féljünk belátni a hibákat és kijavítani őket. Ha látjuk az út közepén a kátyút, kerüljük ki, mert eltörik a kardántengely. A neoliberális globalizációpárti közgazdászokkal az a legnagyobb baj, hogy sündisznók: egy dolgot tanultak meg nagyon, mindenáron azt akarják ráerőltetni a valóságra. Rodrik ezzel szemben róka. A róka több dolgot tud a sünnél, talán egyiket se tökéletesen, de képes arra, hogy a valóságra reflektáljon, és azt a képességét vegye elő, amelyik az adott helyzetben leginkább alkalmazható. És a gyorsan átalakuló, új információktól hemzsegő világban bizony rókákra van szükség. Én is róka akarok lenni.
Ui.: kifejezetten élvezetesen megírt közgazdasági szöveg, amiért külön hálás vagyok. Köszi, Dani, hogy olvasmányos vagy.
Ui2.: és persze köszönöm e könyvet annak, aki karácsonyra meglepett vele, mert figyel rám.
* A beavatkozáspárti politika a fejlődő országokban először a demokratikus intézményeket teremtené meg, és azoktól várja a gazdasági megugrást. Azonban úgy fest, a demokratikus intézmények megfelelően erős középosztály nélkül nem tarthatóak fenn, ám az erős középosztály csak a gazdasági fejlődés eredményeképp alakulhat ki.
** Vannak persze látszólagos sikertörténetek - ezek közül leginkább a kínai gazdasági csodát szokták emlegetni. Ugyanakkor Kína pont azért tud sikeres lenni, mert a globalizáció neki svédasztal, amiről csak a neki tetsző dolgokat pakolja a tányérra. Saját termékeivel elárasztja a világpiacot, élvezve a neoliberalizmus áldásait, de más országok termékeit protekcionista módon kizárja saját piacáról, ezzel védve saját iparát a versenytől. Ilyen értelemben Kína a globalizáció potyautasa.
*** Az EU leggazdagabb és legszegényebb állama között a szorzó csak 3, a világ leggazdagabb és legszegényebb állama között viszont 19. Magyarán akármennyire is meg vagyunk szomorodva a saját anyagi helyzetünkön, anyagi értelemben még mindig a világ felső 10%-ának a része vagyunk.
May 1, 2018
Unique among academics, Rodrik writes in order to be understood and is humble in his outlook. This book is an excellent read and an essential one. We can't have complete free trade, not capital controls and expect robust democracy too. Something has to give. Rodrik offers three solutions: more modest trade, limits on capital controls and allowing for more domestic control of the rest. The other options are global governance regimes or we say good bye to democracy. Every policymaker, especially in the developing world should read this book. It's especially good in its analysis of the economic profession, especially through pointing out some of his colleagues' hubris and hedgehog-edness about trade and free market fundamentalism
August 1, 2012
Rodrick's trilemma states that we cannot simultaneously pursue democracy, national determination, and economic globalization. We can hold a maximum of two factors at the same time. Holding onto democracy and economic globalization and elimination the nation state is the ideal solution. In this scenario, everything from labor to goods to capital flows would be released to move freely without barriers. A world economy functioning as the United States would be much more efficient at distributing labor and shocks. At this point, nevertheless, in our history, this solution seems to be no more than a pipe dream. Most people are not ready to give up their national identity for an international order. The differences in values, culture, and geography are so great across the world that uniting everyone under and international organization is impossible.
The second choice, national det. and econ. globalization, are what the world seems to be presently pursuing. The goal is to gain the benefits from absolute and comparative advantage while still retaining control over local policies. This option looks good on paper and is ideal from the political perspective, but it does not seem to be possible in the real world. When globalization extends to the global financial sector, the reduction of barriers actually increases instability. For globalization to continue to succeed, international controls on capital would be required, thus requiring nations to give up more of their rights. The swift flow of capital in and out of countries. However, because of the great disparities across the globe, international rules could not be agreed upon nor enforced without peoples giving up their freedoms. Even today's attempts are excruciatingly slow. In short, these two are not compatible because the rules of economic globalization pander to the rich countries who made them and can hurt poorer, developing countries.
Retaining democracy and national determination at the expense of full globalization is Rodrick's choice. This option preserves what most people who are having this conversation hold dear: personal freedom and national loyalty. Rodrick explains that the benefits we would gain from even more globalization are small in comparison to the freedoms that we would lose. His key point is that having a thin layer of international rules while holding democracy and national determination is actually a better globalization. This suggestion runs the risk of being derailed on what rules should be in that "thin" layer. For this suggestion to work, rich countries will have to give up a lot more of their pet policies than they have been willing to in the past and allow flexibility. The perennial question of who makes these rules will be difficult to answer.
I appreciate that fact that Rodrick's approach takes the world as it is, not how one wishes it was. The benefit is that his suggestions are workable in today's environment, not some future utopia. The present world is divided by language, different values, and geography, and supporting democracy and national determination at the expense of globalization makes sense. The downside, however, is that concessions we make today could enshrine backward ways of looking at the world into tradition that is hard to escape. Although I support Rodrick's policy suggestions, I think we still need to be constantly pushing forward toward a globalized ideal. Financial controls may be the last thing to go, if ever, but in our efforts to be realistic we should not lose sight of the goal. The policies we make today should have clauses in them that make it understood that the goal is eventually discard them in favor of global governance. These thin layers of international rules should encourage regional trade unions that head the same direction the EU is (supposedly) heading. Maybe those regional unions could one day unite to form a better world.
The second choice, national det. and econ. globalization, are what the world seems to be presently pursuing. The goal is to gain the benefits from absolute and comparative advantage while still retaining control over local policies. This option looks good on paper and is ideal from the political perspective, but it does not seem to be possible in the real world. When globalization extends to the global financial sector, the reduction of barriers actually increases instability. For globalization to continue to succeed, international controls on capital would be required, thus requiring nations to give up more of their rights. The swift flow of capital in and out of countries. However, because of the great disparities across the globe, international rules could not be agreed upon nor enforced without peoples giving up their freedoms. Even today's attempts are excruciatingly slow. In short, these two are not compatible because the rules of economic globalization pander to the rich countries who made them and can hurt poorer, developing countries.
Retaining democracy and national determination at the expense of full globalization is Rodrick's choice. This option preserves what most people who are having this conversation hold dear: personal freedom and national loyalty. Rodrick explains that the benefits we would gain from even more globalization are small in comparison to the freedoms that we would lose. His key point is that having a thin layer of international rules while holding democracy and national determination is actually a better globalization. This suggestion runs the risk of being derailed on what rules should be in that "thin" layer. For this suggestion to work, rich countries will have to give up a lot more of their pet policies than they have been willing to in the past and allow flexibility. The perennial question of who makes these rules will be difficult to answer.
I appreciate that fact that Rodrick's approach takes the world as it is, not how one wishes it was. The benefit is that his suggestions are workable in today's environment, not some future utopia. The present world is divided by language, different values, and geography, and supporting democracy and national determination at the expense of globalization makes sense. The downside, however, is that concessions we make today could enshrine backward ways of looking at the world into tradition that is hard to escape. Although I support Rodrick's policy suggestions, I think we still need to be constantly pushing forward toward a globalized ideal. Financial controls may be the last thing to go, if ever, but in our efforts to be realistic we should not lose sight of the goal. The policies we make today should have clauses in them that make it understood that the goal is eventually discard them in favor of global governance. These thin layers of international rules should encourage regional trade unions that head the same direction the EU is (supposedly) heading. Maybe those regional unions could one day unite to form a better world.
July 22, 2011
Rodrik configures a triangle: "hyperglobalization," democracy and national self-determination--and posits that only two of the three corners of the triangle can hold. Given the impossibility of a system of global governance, the choice is either to eliminate democracy and ignore domestic interests in favor of a global laissez-faire economic policy with liberalized trade as well as finance, or to reduce the ambitions of globalization, being content with the liberalization of trade to date and slowing down the flow of "hot money" which has led to speculation and economic instability in many countries. Rodrik tends to idealize the Bretton Woods era as one where nation-states were free to act as they needed in order to maintain domestic stability and build the welfare state. There is a lot of truth to this description, and the loss of national autonomy that has characterized the international system since the 1980s is regrettable. However, Bretton Woods was built on both a "baby boom" in Europe and the US as well as postwar political conditions that no longer hold today. In that sense, while Rodrik is able to argue convincingly that the merits of financial liberalization are dubious at best--in particular due to the lack of global governance and market support structures--and that trade liberalization may have maximized its value and there is little to gain from pressing ahead, the weakest part of the book is Rodrik's prescriptions for the future. Having almost simultaneously read the (more conservative) Paul Collier's "The Bottom Billion," it is also notable how many African countries in particular were left out of the gains of the postwar era and have failed to realize the benefits from trade, which could perhaps benefit from certain (though by no means all) additional liberalization or compensation policies.
Rodrik's core message is that the economics cannot be separated from the politics, and markets cannot succeed without a strong state and strong market institutions; that globalization and its related changes hurt many people, permanently, regardless of what its advocates say, and these effects must be considered; and that therefore, in order to attain growth that is compatible with national sovereignty and democracy, we must commit to "thin" globalization that is customizable to countries' needs. The message--that economics alone do not and cannot serve as a substitute for policy judgment--is forgotten every few generations. The global economic system, and the European Union in particular, have provided clear examples of the perils of overliberalization without credible market enforcement institutions and the failure to take into account domestic political constituencies.
Rodrik's core message is that the economics cannot be separated from the politics, and markets cannot succeed without a strong state and strong market institutions; that globalization and its related changes hurt many people, permanently, regardless of what its advocates say, and these effects must be considered; and that therefore, in order to attain growth that is compatible with national sovereignty and democracy, we must commit to "thin" globalization that is customizable to countries' needs. The message--that economics alone do not and cannot serve as a substitute for policy judgment--is forgotten every few generations. The global economic system, and the European Union in particular, have provided clear examples of the perils of overliberalization without credible market enforcement institutions and the failure to take into account domestic political constituencies.
June 19, 2014
Well written. One important point, from all the other political books, this book is outstandingly clear and to the point.
January 19, 2020
Wherein Dani tries to illustrate the benefits and ills of globalization. Long story short, let trade do whatever it wants, relax labour immigration laws and be super sketchy about financial globalization.
A little outdated at this stage but critical of the lack of democratic accountability in supra-national economic institutions our boy DRod makes a reasonable if not entirely convincing case for how to construct a rising tide that would indeed carry all boats.
3.5
A little outdated at this stage but critical of the lack of democratic accountability in supra-national economic institutions our boy DRod makes a reasonable if not entirely convincing case for how to construct a rising tide that would indeed carry all boats.
3.5
December 27, 2016
This book helps explain a lot of the hostility we've seen this year with Brexit and Trump, I think: Rodrik argues we can't have hyper-globalisation, democracy and national self-determination all at once; only two of three is sustainable. So rather than pushing for very high levels of economic integration that minimise states' ability to respond to what the people want -- restrictions of the type pushed through free trade agreements, the World Trade Organization and so on -- it's more sensible to aim for an updated version of the Bretton Woods system -- 'thin' integration that recognises different countries want different things out of globalisation and will impose different social, environment and safety standards. Rather than seeing national restrictions on imports or capital movement that protect labour or financial standards as a failing, Rodrik argues we should see these as necessary to the preservation of the benefits of globalisation. He also makes the case that pushing developing nations to adopt the kind of open economy policies of developed countries is harmful in many cases, and that a contextual, pragmatic approach is preferable to a standardised 'shopping list' of reforms.
December 3, 2022
Had to read this for school and have been skipping through chapters, but I’d really recommend it. It’s a great example of an economics book that isn’t overly complicated or full of jargon incomprehensible to the general public.
Rodrik is brilliant, and I think his central thesis poses a balanced approach to globalization based on historical evidence as opposed to economist’s hubris.
Rodrik is brilliant, and I think his central thesis poses a balanced approach to globalization based on historical evidence as opposed to economist’s hubris.
August 12, 2022
Specifically for Economist
March 12, 2024
ENGLISH
Harvard Kennedy School Professor Dani Rodrik analyzes the complex economic consequences of globalization, either globally and nationally taking consideration a world characterized by countries with so many disparities.
He does that without a Manichaean view of free trade – the book’s focus. Rodrik can already be seen as a heterodox economist just for not being an unquestionable cheerleader of free trade or a maximum enthusiast of the neoliberal recipe for countries. Rodrik’s main point is that one cannot expect the world to have complete free trade without harming nations’ democracies at least to a certain extent.
Globalization is marked by a lot of controversy among economists and social scientists, but Rodrik does a great job here analyzing it in its various intricate relations — and extrinsic factors and effects too. The book was published a couple of years after the 2008 crisis, therefore still in the heat of the moment; nevertheless his analysis read as quite sober.
Rodrik is clearly a nostalgic for Breton Woods and GATT, at a time when the world was more suspicious of the free flow of capital and lived with more protectionist rules. For him, the entering of the neoliberal era was worse for world economies, as WTO prescribed stricter rules imposing free trade among nations and at the same time the scenario was of strong world financialization (i.e., freer capital flows). The new scene ended up resulting in crises such as the one which hit Asian countries in 1997, among others, and also of 2008.
This is a rich, complementary read, especially after going through other good books on the subject as was my case, but approached by historians, such as Quinn Slobodian in “Globalists” (my review here: https://www.goodreads.com/review/show...) and Gary Gestle in “The Rise and Fall of the Neoliberal Order” (my review here: https://www.goodreads.com/review/show...).
Rodrik ranges from the economic policies applied by dominant and developing economies throughout the 20th century, with varying results, to his opinions and predictions about the direction the world could take without radical globalization. The author delivers reasonable depth without boring the reader with too many technical details.
PORTUGUÊS
O professor da Kennedy School de Harvard, Dani Rodrik, analisa as complexas consequências econômicas da globalização, tanto globalmente como nacionalmente, considerando um mundo caracterizado por países com imensas disparidades.
Ele faz isso sem uma visão maniqueísta sobre o livre comércio – o foco do livro. Só por isso — não ser um torcedor inquestionável do livre comércio ou um entusiasta máximo da receita neoliberal para os países —, ele já pode ser visto como um economista heterodoxo. O ponto principal de Rodrik é que não se pode esperar que o mundo tenha um comércio livre total sem prejudicar as democracias das nações, pelo menos até certo ponto.
A globalização é marcada por muita controvérsia entre economistas e cientistas sociais, mas Rodrik faz aqui um excelente trabalho analisando-a nas suas várias relações intricadas — e também em seus fatores e efeitos extrínsecos. O livro foi publicado alguns anos depois da crise de 2008, portanto ainda no calor do momento; porém, suas análises parecem bastante sóbrias.
Rodrik é claramente um nostálgico de Breton Woods e do GATT, numa época em que o mundo desconfiava mais do livre fluxo de capitais e convivia com regras mais protecionistas. Para ele, a entrada do novo cenário neoliberal, com uma OMC prescrevendo regras mais rígidas impondo o livre comércio entre as nações e ao mesmo tempo num cenário de financeirização do mundo (ou seja, fluxos de capitais mais livres) foi pior para as economias mundiais. A nova cena acabou resultando em crises como a dos países asiáticos de 1997, entre outras, e também na de 2008.
Esta é uma boa leitura — e complementar também, especialmente depois de passar por outros bons livros sobre o assunto, como foi o meu caso, mas abordados por historiadores, como Quinn Slobodian em “Globalists” (minha crítica aqui: https://www.goodreads.com/review/show...) e Gary Gestle em “The Rise and Fall of the Neoliberal Order” (minha crítica aqui: https://www.goodreads.com/review/show...).
Rodrik percorre desde as políticas econômicas aplicadas pelas economias dominantes e em desenvolvimento ao longo do século XX, com resultados variados, até suas opiniões e previsões sobre o rumo que o mundo poderia seguir sem uma globalização radical. O autor entrega profundidade razoável sem aborrecer o leitor com demasiados detalhes técnicos.
Harvard Kennedy School Professor Dani Rodrik analyzes the complex economic consequences of globalization, either globally and nationally taking consideration a world characterized by countries with so many disparities.
He does that without a Manichaean view of free trade – the book’s focus. Rodrik can already be seen as a heterodox economist just for not being an unquestionable cheerleader of free trade or a maximum enthusiast of the neoliberal recipe for countries. Rodrik’s main point is that one cannot expect the world to have complete free trade without harming nations’ democracies at least to a certain extent.
Globalization is marked by a lot of controversy among economists and social scientists, but Rodrik does a great job here analyzing it in its various intricate relations — and extrinsic factors and effects too. The book was published a couple of years after the 2008 crisis, therefore still in the heat of the moment; nevertheless his analysis read as quite sober.
Rodrik is clearly a nostalgic for Breton Woods and GATT, at a time when the world was more suspicious of the free flow of capital and lived with more protectionist rules. For him, the entering of the neoliberal era was worse for world economies, as WTO prescribed stricter rules imposing free trade among nations and at the same time the scenario was of strong world financialization (i.e., freer capital flows). The new scene ended up resulting in crises such as the one which hit Asian countries in 1997, among others, and also of 2008.
This is a rich, complementary read, especially after going through other good books on the subject as was my case, but approached by historians, such as Quinn Slobodian in “Globalists” (my review here: https://www.goodreads.com/review/show...) and Gary Gestle in “The Rise and Fall of the Neoliberal Order” (my review here: https://www.goodreads.com/review/show...).
Rodrik ranges from the economic policies applied by dominant and developing economies throughout the 20th century, with varying results, to his opinions and predictions about the direction the world could take without radical globalization. The author delivers reasonable depth without boring the reader with too many technical details.
PORTUGUÊS
O professor da Kennedy School de Harvard, Dani Rodrik, analisa as complexas consequências econômicas da globalização, tanto globalmente como nacionalmente, considerando um mundo caracterizado por países com imensas disparidades.
Ele faz isso sem uma visão maniqueísta sobre o livre comércio – o foco do livro. Só por isso — não ser um torcedor inquestionável do livre comércio ou um entusiasta máximo da receita neoliberal para os países —, ele já pode ser visto como um economista heterodoxo. O ponto principal de Rodrik é que não se pode esperar que o mundo tenha um comércio livre total sem prejudicar as democracias das nações, pelo menos até certo ponto.
A globalização é marcada por muita controvérsia entre economistas e cientistas sociais, mas Rodrik faz aqui um excelente trabalho analisando-a nas suas várias relações intricadas — e também em seus fatores e efeitos extrínsecos. O livro foi publicado alguns anos depois da crise de 2008, portanto ainda no calor do momento; porém, suas análises parecem bastante sóbrias.
Rodrik é claramente um nostálgico de Breton Woods e do GATT, numa época em que o mundo desconfiava mais do livre fluxo de capitais e convivia com regras mais protecionistas. Para ele, a entrada do novo cenário neoliberal, com uma OMC prescrevendo regras mais rígidas impondo o livre comércio entre as nações e ao mesmo tempo num cenário de financeirização do mundo (ou seja, fluxos de capitais mais livres) foi pior para as economias mundiais. A nova cena acabou resultando em crises como a dos países asiáticos de 1997, entre outras, e também na de 2008.
Esta é uma boa leitura — e complementar também, especialmente depois de passar por outros bons livros sobre o assunto, como foi o meu caso, mas abordados por historiadores, como Quinn Slobodian em “Globalists” (minha crítica aqui: https://www.goodreads.com/review/show...) e Gary Gestle em “The Rise and Fall of the Neoliberal Order” (minha crítica aqui: https://www.goodreads.com/review/show...).
Rodrik percorre desde as políticas econômicas aplicadas pelas economias dominantes e em desenvolvimento ao longo do século XX, com resultados variados, até suas opiniões e previsões sobre o rumo que o mundo poderia seguir sem uma globalização radical. O autor entrega profundidade razoável sem aborrecer o leitor com demasiados detalhes técnicos.
March 31, 2018
The central idea behind this book that - governments need to intervene in order to optimise / balance outcomes delivered by free markets - is best presented by Hyman Minsky as brilliantly detailed by L Randall Wray in his book ‘Why Minsky Matters’ .
The shallowness of this book, which covers the ideas of various economists who have worked on this subject is best revealed by the fact that in this entire book Hyman Minsky is not mentioned even once.
Shocking !!!
The shallowness of this book, which covers the ideas of various economists who have worked on this subject is best revealed by the fact that in this entire book Hyman Minsky is not mentioned even once.
Shocking !!!
January 3, 2012
This book is pretty much what my macroeconomics professor was trying to teach me, but much more interesting. The author does a nice job explaining some very complex topics in a way the lay reader can understand.
January 4, 2024
This book tries to go after the following question: "if we want to increase our economic growth, should we throw ourselves open to the forces emanating from the world economy, or protect ourselves from them?" Rodrik puts forth nuanced arguments suggesting countries have lost much as they opened themselves.
I'll start with the merits of the book and the author's arguments:
1. He sets the stage well, opening with Hudson's Bay, the world's first joint stock trading company. He goes on to explain everything from Corn Laws to the gold standard and Keynesian economics to recent financial crises.
2. The author's writing shines when he makes lists. The best example is his list of areas where "hyperglobalization impinges on democratic choices," namely: labor standards ("who can work, the minimum wage, the maximum hours of work, the nature of working conditions, what the employer can ask the worker to do, and how easily the worker can be fired"), corporate tax competition, health and safety standards, regulatory takings, and industrial policy in developing nations. Other small examples are the lessons different economists could draw from South Korea's growth story, and the list of steps that underscored the legitimacy of national governments in the wake of the crisis of 07-08.
3. He eloquently summarizes the key consequences of the deep model of globalization on:
a. Development: "By restricting in the name of freer trade the scope for industrial policies needed to restructure and diversify national economies, it undercuts globalization as a positive force for development."
b. Democratic arrangements: "There is a fundamental tension between hyperglobalization and democratic politics. Hyperglobalization does require shrinking domestic politics."
c. Institutional underpinnings: "One [of the blind spots in the vision that hyperglobalizers offered] was that we could push for rapid and deep integration in the world economy and let institutional underpinnings catch up."
At the very least, the author succeeds in arguing that "globalization on its own does not generate [technological] capabilities; it simply allows nations to leverage better those that they already possess."
4. Aside from critique, he offers his approach to constructive economic policy: "The trick is to identify the most binding constraints that prevent entrepreneurs from investing in the modern industries and services that fuel economic growth." He emphasizes that poor countries don't need to address their "multiple shortcomings" all at the same time and endorses a fox's approach.
5. A couple of points he makes deserve special mention:
a. He argues convincingly, although without much evidence, that when trade is already pretty free, reducing barriers further produces much larger economic dislocation than net economic gain. It is the only time in the book he resorts to a mathematical model from textbook economics.
b. His point about opening labor markets to unleash larger gains than freer trade was appealing. He blueprints a program to bring temporary migrants to rich countries and cites World Bank figures estimating $360 billion of gains to the global economy. I would certainly not have said no to more proposals and their expected gains throughout the book.
But here's why I think the book deserves only three stars:
1. Some of the author's rhetorical devices are just ridiculous:
a. The epilogue ("bedtime story for grown ups") is offered as a deeply meaningful parable. Collecting tolls on the main road out of the village would allegedly solve all the local fishermen's worries. But does it in fact solve the local fishermen's profitability woes from foreign competition? When they also pay high taxes in their own village (to compensate the weavers), while paying the same price to fish in the lake (i.e. nothing) and to use the road as foreign fisherman, why shouldn't they move elsewhere?
b. The author's Mauritius story is misplaced and weak. He ends the story saying, "Mauritius… faces the challenges of the next stages of diversification. The garment sector can no longer propel the economy forward… Boosting growth requires a new strategy" Then why do we spend time hearing about Mauritius and its past success at boosting exports via active intervention?
c. Traffic rules analogy: as he espouses thinner globalization, the author suggests that "we need traffic rules that help vehicles of different size and shape and traveling at varying speeds navigate around each other, rather than impose an identical car or a uniform speed limit on all." There's very little value in this analogy because it oversimplifies the argument. This is clear if we map the components of the author's trilemma (nation states, democratic politics, and globalization) to this analogy. Say
i. A nation state is a cohort of vehicles traveling on a road that can bargain collectively.
ii. Democratic politics is the process of deciding, within a nation state's cohort, who gets to travel in which vehicles, and how much of the nation's fuel they get access to.
iii. Globalization is the process of traveling fast on the road by buying faster vehicles from advanced players, selling them fuel, and agreeing to travel per the rules of the fast players instead of constructing one's own roads and vehicles.
Now it is even harder to see what is wrong with hyperglobalization and free trade. The analogy merely clouds the author's central message.
2. The author seems to have a populist bias that is neither informed nor informative e.g. "The opportunity gap [between skilled workers and less workers with fewer skills] reveals a certain dark side to the clamor for global governance. The construction of transnational political communities is a project of globalized elites attuned largely to their needs." Firstly, this directly contradicts with his positive rendition of Latvia's experience in the crisis, in whose case, freedom of movement within the EU acted as a "safety valve" to take the pressure of a Latvia's then uncompetitive economy. Secondly, it also contradicts with the author's calls for labor market liberalization as a source of gains for the world economy. To simultaneously claim that a global identity and the freedom to move are a project of the elite as well as a boost to economic security and productivity is a serious gap in reasoning.
He also uses Netville as an example to assert that "distance matters" and arrive at the conclusion that "our local attachments still largely define us and our interests." With this sweeping, unwelcome generalization, I can only explain some of the author's protectionist arguments as strong biases.
3. The author backs democratic politics within national borders as a magical solution to a variety of problems. He argues it is the only way to determine when free trade makes sense (over protectionism/industrial policy): "Democratic politics is messy and does not always get it 'right.' But when we have to trade off different values and interests, there is nothing else to rely on." Neoliberals and hyperglobalizers typically counter-argue that democratic politics does not offer effective tradeoffs between values/interests and economic efficiency; that unless trade is free, there is always wasteful investment.
I start to feel uncomfortable when Rodrik further argues that democracies should be able to preserve domestically agreed distributional bargains. Democratic politics is largely a fight over a pie that grows at a well-defined rate. Preserving distributional bargains tends help the rich get richer and deprive the poor of opportunities to rise, just as (the author himself claims that) globalization currently helps rich industrialized nations maintain their advantage over resource exporting nations. So why don't we focus on redistributing the gains of globalization and trade more fairly instead of defending the right to maintain status quo?
The author is also a bit delusional about the extent to which we can rely on democracy to protect from protectionism. He suggests "when social safeguards pose serious threat to poor countries… non-governmental organizations and other groups may mobilize against the proposed opt-out, and those considerations may well outweigh ultimately the costs of domestic dislocations." He further suggests that labor unions "are much less likely to carry the day against countervailing domestic interests when foreign working conditions reflect poor productivity rather than repression of rights." Does he in fact not know any case when democratic discussions can be highjacked by interest groups? A single look at the guns lobby or airline oligopoly in America is enough to poke holes in this argument.
Lastly, I don't agree with the author's stance on taking away non-democracies' leeway in trade negotiations. Countries have a right to organize themselves as they like. They shouldn't be bullied to give up their politics systems. It is the only way diversity and natural selection can prevail.
4. Rodrik's most significant policy proposal in the book, that trade deals should come with flexible opt-outs, is far from bullet proof. He tries to appeal to the fact that both players in a trade deal have an incentive to participate, unlike participation in environmental programs where everyone has an incentive to free-ride. But how does he expect that unilateral opt-outs can sail through without retaliation? One opt-out could lead to the disintegration of a whole deal via retaliatory triggers. The whole point of a deal is the bundling of benefits and non-benefits.
Rodrik tries to cherry-pick the past in his defense: "if mechanisms explicitly designed to facilitate protectionist barriers, such as the anti-dumping rules of the GATT, have not destroyed the multilateral trade regime thus far, it is not clear why well-designed exit clauses would have consequences that are worse." This is a non-argument as the circumstances of GATT have little relation to the present.
The naivete of Rodrik's suggestion in the final chapter that China should take opt-outs from rich importing nations "in its stride" as regular maintenance to the system exposes the weakness of this mechanism. Overall, my impression is that figuring out the means to deliberalization are less important to Rodrik than the end itself.
5. He is also slightly self-aggrandizing as he recounts being invited to South Africa to scope industrial policies, a pointless story given South Africa's economic situation has barely improved. But I didn't expect less from a Harvard economist.
Ultimately, it seems that the author's chief inclination is to partly rollback the world's trade regime, so that "advanced countries could seek temporary protection against imports" to preserve democratically agreed standards and distributional bargains and "poor nations might be allowed to subsidize industrial activities… aimed at stimulating technological capabilities." Everyone could also be happier about reclaiming their sovereignty and policy space. What the author tries to propose as democratic mechanisms to achieve this rollback are questionable at best. But in the absence of better justification of the benefits of hyperglobalization from its proponents for everyone involved, I am happy to accept that a bit of creative destruction won't hurt. If anything it could help produce a better model for globalization.
I'll start with the merits of the book and the author's arguments:
1. He sets the stage well, opening with Hudson's Bay, the world's first joint stock trading company. He goes on to explain everything from Corn Laws to the gold standard and Keynesian economics to recent financial crises.
2. The author's writing shines when he makes lists. The best example is his list of areas where "hyperglobalization impinges on democratic choices," namely: labor standards ("who can work, the minimum wage, the maximum hours of work, the nature of working conditions, what the employer can ask the worker to do, and how easily the worker can be fired"), corporate tax competition, health and safety standards, regulatory takings, and industrial policy in developing nations. Other small examples are the lessons different economists could draw from South Korea's growth story, and the list of steps that underscored the legitimacy of national governments in the wake of the crisis of 07-08.
3. He eloquently summarizes the key consequences of the deep model of globalization on:
a. Development: "By restricting in the name of freer trade the scope for industrial policies needed to restructure and diversify national economies, it undercuts globalization as a positive force for development."
b. Democratic arrangements: "There is a fundamental tension between hyperglobalization and democratic politics. Hyperglobalization does require shrinking domestic politics."
c. Institutional underpinnings: "One [of the blind spots in the vision that hyperglobalizers offered] was that we could push for rapid and deep integration in the world economy and let institutional underpinnings catch up."
At the very least, the author succeeds in arguing that "globalization on its own does not generate [technological] capabilities; it simply allows nations to leverage better those that they already possess."
4. Aside from critique, he offers his approach to constructive economic policy: "The trick is to identify the most binding constraints that prevent entrepreneurs from investing in the modern industries and services that fuel economic growth." He emphasizes that poor countries don't need to address their "multiple shortcomings" all at the same time and endorses a fox's approach.
5. A couple of points he makes deserve special mention:
a. He argues convincingly, although without much evidence, that when trade is already pretty free, reducing barriers further produces much larger economic dislocation than net economic gain. It is the only time in the book he resorts to a mathematical model from textbook economics.
b. His point about opening labor markets to unleash larger gains than freer trade was appealing. He blueprints a program to bring temporary migrants to rich countries and cites World Bank figures estimating $360 billion of gains to the global economy. I would certainly not have said no to more proposals and their expected gains throughout the book.
But here's why I think the book deserves only three stars:
1. Some of the author's rhetorical devices are just ridiculous:
a. The epilogue ("bedtime story for grown ups") is offered as a deeply meaningful parable. Collecting tolls on the main road out of the village would allegedly solve all the local fishermen's worries. But does it in fact solve the local fishermen's profitability woes from foreign competition? When they also pay high taxes in their own village (to compensate the weavers), while paying the same price to fish in the lake (i.e. nothing) and to use the road as foreign fisherman, why shouldn't they move elsewhere?
b. The author's Mauritius story is misplaced and weak. He ends the story saying, "Mauritius… faces the challenges of the next stages of diversification. The garment sector can no longer propel the economy forward… Boosting growth requires a new strategy" Then why do we spend time hearing about Mauritius and its past success at boosting exports via active intervention?
c. Traffic rules analogy: as he espouses thinner globalization, the author suggests that "we need traffic rules that help vehicles of different size and shape and traveling at varying speeds navigate around each other, rather than impose an identical car or a uniform speed limit on all." There's very little value in this analogy because it oversimplifies the argument. This is clear if we map the components of the author's trilemma (nation states, democratic politics, and globalization) to this analogy. Say
i. A nation state is a cohort of vehicles traveling on a road that can bargain collectively.
ii. Democratic politics is the process of deciding, within a nation state's cohort, who gets to travel in which vehicles, and how much of the nation's fuel they get access to.
iii. Globalization is the process of traveling fast on the road by buying faster vehicles from advanced players, selling them fuel, and agreeing to travel per the rules of the fast players instead of constructing one's own roads and vehicles.
Now it is even harder to see what is wrong with hyperglobalization and free trade. The analogy merely clouds the author's central message.
2. The author seems to have a populist bias that is neither informed nor informative e.g. "The opportunity gap [between skilled workers and less workers with fewer skills] reveals a certain dark side to the clamor for global governance. The construction of transnational political communities is a project of globalized elites attuned largely to their needs." Firstly, this directly contradicts with his positive rendition of Latvia's experience in the crisis, in whose case, freedom of movement within the EU acted as a "safety valve" to take the pressure of a Latvia's then uncompetitive economy. Secondly, it also contradicts with the author's calls for labor market liberalization as a source of gains for the world economy. To simultaneously claim that a global identity and the freedom to move are a project of the elite as well as a boost to economic security and productivity is a serious gap in reasoning.
He also uses Netville as an example to assert that "distance matters" and arrive at the conclusion that "our local attachments still largely define us and our interests." With this sweeping, unwelcome generalization, I can only explain some of the author's protectionist arguments as strong biases.
3. The author backs democratic politics within national borders as a magical solution to a variety of problems. He argues it is the only way to determine when free trade makes sense (over protectionism/industrial policy): "Democratic politics is messy and does not always get it 'right.' But when we have to trade off different values and interests, there is nothing else to rely on." Neoliberals and hyperglobalizers typically counter-argue that democratic politics does not offer effective tradeoffs between values/interests and economic efficiency; that unless trade is free, there is always wasteful investment.
I start to feel uncomfortable when Rodrik further argues that democracies should be able to preserve domestically agreed distributional bargains. Democratic politics is largely a fight over a pie that grows at a well-defined rate. Preserving distributional bargains tends help the rich get richer and deprive the poor of opportunities to rise, just as (the author himself claims that) globalization currently helps rich industrialized nations maintain their advantage over resource exporting nations. So why don't we focus on redistributing the gains of globalization and trade more fairly instead of defending the right to maintain status quo?
The author is also a bit delusional about the extent to which we can rely on democracy to protect from protectionism. He suggests "when social safeguards pose serious threat to poor countries… non-governmental organizations and other groups may mobilize against the proposed opt-out, and those considerations may well outweigh ultimately the costs of domestic dislocations." He further suggests that labor unions "are much less likely to carry the day against countervailing domestic interests when foreign working conditions reflect poor productivity rather than repression of rights." Does he in fact not know any case when democratic discussions can be highjacked by interest groups? A single look at the guns lobby or airline oligopoly in America is enough to poke holes in this argument.
Lastly, I don't agree with the author's stance on taking away non-democracies' leeway in trade negotiations. Countries have a right to organize themselves as they like. They shouldn't be bullied to give up their politics systems. It is the only way diversity and natural selection can prevail.
4. Rodrik's most significant policy proposal in the book, that trade deals should come with flexible opt-outs, is far from bullet proof. He tries to appeal to the fact that both players in a trade deal have an incentive to participate, unlike participation in environmental programs where everyone has an incentive to free-ride. But how does he expect that unilateral opt-outs can sail through without retaliation? One opt-out could lead to the disintegration of a whole deal via retaliatory triggers. The whole point of a deal is the bundling of benefits and non-benefits.
Rodrik tries to cherry-pick the past in his defense: "if mechanisms explicitly designed to facilitate protectionist barriers, such as the anti-dumping rules of the GATT, have not destroyed the multilateral trade regime thus far, it is not clear why well-designed exit clauses would have consequences that are worse." This is a non-argument as the circumstances of GATT have little relation to the present.
The naivete of Rodrik's suggestion in the final chapter that China should take opt-outs from rich importing nations "in its stride" as regular maintenance to the system exposes the weakness of this mechanism. Overall, my impression is that figuring out the means to deliberalization are less important to Rodrik than the end itself.
5. He is also slightly self-aggrandizing as he recounts being invited to South Africa to scope industrial policies, a pointless story given South Africa's economic situation has barely improved. But I didn't expect less from a Harvard economist.
Ultimately, it seems that the author's chief inclination is to partly rollback the world's trade regime, so that "advanced countries could seek temporary protection against imports" to preserve democratically agreed standards and distributional bargains and "poor nations might be allowed to subsidize industrial activities… aimed at stimulating technological capabilities." Everyone could also be happier about reclaiming their sovereignty and policy space. What the author tries to propose as democratic mechanisms to achieve this rollback are questionable at best. But in the absence of better justification of the benefits of hyperglobalization from its proponents for everyone involved, I am happy to accept that a bit of creative destruction won't hurt. If anything it could help produce a better model for globalization.
December 10, 2019
I have pages and pages of notes on this book -- not because it's dense, but rather because Rodrik has plenty of memorable passages, saying a lot with a little -- but will just go from memory.
Rodrik's basic thesis -- the paradox behind the book's title -- is that in order to strengthen globalization, we need to loosen it a bit. Take a step back from it. Allow the nation state to strengthen more. Allow diversity in industrial, regulatory, and trade policies. Throw a bit of sand in the gears of international trade. At Rodrik's most concrete policy prescriptions, develop an "Agreement on Development and Social Safeguards" whereby countries can put up trade barriers whenever they can prove that a majority of their nation is in favor of it (tougher for non-democratic societies). No need for substantive justification. Just ensure it's a true process, reflective of broader interests not parochial protectionism. This will help rebuild faith in globalization. Ensure more public support through more democratic policy making even if that means more protectionism. The best way to harness globalization, to put it on sure footing for the future, is to take a step back from globalization.
Tied to Rodrik's thesis is a fairly compelling, if vague and anecdotal in sections, telling of history. He reaches back to the Industrial Revolution, but the history most relevant to this book is post-World War II. In Rodrik's telling, Bretton Woods got it right. It put in place an international structure for trade and finance, light rules (he refers to them as "traffic rules") that enabled countries to harness the benefits of trade while still allowing them space to enact industrial policies and trade barriers that would not be allowed today. This enabled decades of steady, significant growth. By lowering barriers to trade and the cost of doing businesses, economies were able to harness globalization's positive attributes for economic growth. Then, in the 80s and 90s there was a shift towards hyperglobalization. A logical view that if some globalization had harnessed significant global growth, more globalization could harness yet more significant global growth. Enter the WTO, GATT 1994, etc. The problem with this push towards hyperglobalization is that the benefits of globalization have already largely been harnessed. According to Rodrik, even if all WTO members were to zero out their remaining tariffs and remove other NTBs, global economic growth would not be that much greater. And societies on the whole would suffer from the negative effects of trade. Trust in globalization as a whole would diminish to everyone's detriment.
I found it a pretty compelling thesis. There was plenty I disagreed with. And I would worry that giving countries so much space to "opt-out" of the rules whenever they choose would just allow big countries to push little countries around, and trade flaps to flare-up incessantly. But to Rodrik that's a small price to pay for a greater good.
In 2011, when this book was first published, it was probably more revolutionary. More anathema to his peers and policy makers. Nearly nine years later, it seems prescient in parts and stunningly moderate overall. Rodrik is not an ideologue by any means. It's his evenhanded manner that, in part, makes this book so compelling to me. When he offers policy prescriptions, he's always up front with his own assumptions. When he offers a thesis, he seems to seek a middle ground, to accept some of the points of his opponents as he builds towards a new place.
This book could have probably been a long journal article. The scope of the book seems unnecessarily broad. There are chapters on development economics, immigration, and international finance that seemed unnecessary to Rodrik's thesis. Tacked on just so that this could be a book rather than an extended article. And, at times, Rodrik's non-academic style is frustrating. The book is chock full of citations, but doesn't seem to bring any new evidence or research to the table. There's not a single graph or chart in the book. Few numbers. (Which is probably the point, Rodrik clearly is writing this with a lay audience in mind.) Rodrik seems to use every analogy under the sun. Economic growth is a car, economists are either hedgehogs or foxes, etc etc.
I won't even wade into Rodrik's theory of "the political trilemma of the world economy" -- an interesting idea, though one that I didn't get quite as much out of as the book's simpler paradox (which rests on top of the trilemma). Suffice it to say that I found this book thought-provoking though in a way that didn't challenge my beliefs too fundamentally. Shifting my beliefs, not by shattering them but rather building on them. I suppose that's what made it so powerful.
Rodrik's basic thesis -- the paradox behind the book's title -- is that in order to strengthen globalization, we need to loosen it a bit. Take a step back from it. Allow the nation state to strengthen more. Allow diversity in industrial, regulatory, and trade policies. Throw a bit of sand in the gears of international trade. At Rodrik's most concrete policy prescriptions, develop an "Agreement on Development and Social Safeguards" whereby countries can put up trade barriers whenever they can prove that a majority of their nation is in favor of it (tougher for non-democratic societies). No need for substantive justification. Just ensure it's a true process, reflective of broader interests not parochial protectionism. This will help rebuild faith in globalization. Ensure more public support through more democratic policy making even if that means more protectionism. The best way to harness globalization, to put it on sure footing for the future, is to take a step back from globalization.
Tied to Rodrik's thesis is a fairly compelling, if vague and anecdotal in sections, telling of history. He reaches back to the Industrial Revolution, but the history most relevant to this book is post-World War II. In Rodrik's telling, Bretton Woods got it right. It put in place an international structure for trade and finance, light rules (he refers to them as "traffic rules") that enabled countries to harness the benefits of trade while still allowing them space to enact industrial policies and trade barriers that would not be allowed today. This enabled decades of steady, significant growth. By lowering barriers to trade and the cost of doing businesses, economies were able to harness globalization's positive attributes for economic growth. Then, in the 80s and 90s there was a shift towards hyperglobalization. A logical view that if some globalization had harnessed significant global growth, more globalization could harness yet more significant global growth. Enter the WTO, GATT 1994, etc. The problem with this push towards hyperglobalization is that the benefits of globalization have already largely been harnessed. According to Rodrik, even if all WTO members were to zero out their remaining tariffs and remove other NTBs, global economic growth would not be that much greater. And societies on the whole would suffer from the negative effects of trade. Trust in globalization as a whole would diminish to everyone's detriment.
I found it a pretty compelling thesis. There was plenty I disagreed with. And I would worry that giving countries so much space to "opt-out" of the rules whenever they choose would just allow big countries to push little countries around, and trade flaps to flare-up incessantly. But to Rodrik that's a small price to pay for a greater good.
In 2011, when this book was first published, it was probably more revolutionary. More anathema to his peers and policy makers. Nearly nine years later, it seems prescient in parts and stunningly moderate overall. Rodrik is not an ideologue by any means. It's his evenhanded manner that, in part, makes this book so compelling to me. When he offers policy prescriptions, he's always up front with his own assumptions. When he offers a thesis, he seems to seek a middle ground, to accept some of the points of his opponents as he builds towards a new place.
This book could have probably been a long journal article. The scope of the book seems unnecessarily broad. There are chapters on development economics, immigration, and international finance that seemed unnecessary to Rodrik's thesis. Tacked on just so that this could be a book rather than an extended article. And, at times, Rodrik's non-academic style is frustrating. The book is chock full of citations, but doesn't seem to bring any new evidence or research to the table. There's not a single graph or chart in the book. Few numbers. (Which is probably the point, Rodrik clearly is writing this with a lay audience in mind.) Rodrik seems to use every analogy under the sun. Economic growth is a car, economists are either hedgehogs or foxes, etc etc.
I won't even wade into Rodrik's theory of "the political trilemma of the world economy" -- an interesting idea, though one that I didn't get quite as much out of as the book's simpler paradox (which rests on top of the trilemma). Suffice it to say that I found this book thought-provoking though in a way that didn't challenge my beliefs too fundamentally. Shifting my beliefs, not by shattering them but rather building on them. I suppose that's what made it so powerful.
April 2, 2019
My quick take: I found Rodrik's book on globalization to be relevant and timely, even though it was written 8 years ago. Rodrik has studied globalization since the Asian financial crisis in the '90s, and has been recommending being cautious about globalization for a long time.
The crux of his argument is this: While the political zeitgeist of recent decades has been promoting the three pillars of democracy, national sovereignty, and globalization, these pillars have inherent contradictions and in practice we can really only prioritize two. For example, we can have democracy and national sovereignty, but less globalization -- Rodrik argues that the best example for this is the era of Bretton Woods. Theoretically, we can try to have democracy and globalization, but less national sovereignty, but that certainly is not the direction that the world is going. Rodrik would argue that is a good thing, because the world is too heterogeneous to be governed via global governance. Finally, we can try to have national sovereignty and globalization, but in that case it would come at the expense of democracy. Globalization limits the range of acceptable political and economic policy in a country, and thereby undermines democratic decision making. For example Rodrik writes, joining the WTO comes with expectations, not just on trade tariffs but on what should be considered fair or unfair product or labor standards. In that case, a country would need to make labor market decisions based on what the WTO expects, and not based on what the democratic polity of a country desires. Rodrik argues that, facing these trade-offs, we should prioritize democracy and national sovereignty.
Another line of argument Rodrik made that struck me was that the gains of trade from further trade liberalization are incredibly limited and come with huge redistribution trade-offs. One back of the envelope he conducted suggests that we may need to redistribute by 50 units in order to gain 1 unit of efficiency gain. There are also systemic risks that increase with increased liberalization of capital markets. Instead, Rodrik points out that a valuable policy area we should be looking into is greater liberalization of labor markets, the last global marketplace that remains incredibly protectionist. His argument is essentially that, allowing for more labor migration across countries, especially from poor countries to rich countries, even if it is just a work permit with no path toward permanent residency, could have a much greater development / economic impact. In a global environment today that is increasingly populist and wary of migrants, I wonder when this line of thinking will catch on, if at all. Despite some countries going in the opposite direction, notably the United States, there are some countries like Japan that are easing restrictions and encouraging more migration. This is an area of political economy that I will be paying close attention to in the coming decade.
The crux of his argument is this: While the political zeitgeist of recent decades has been promoting the three pillars of democracy, national sovereignty, and globalization, these pillars have inherent contradictions and in practice we can really only prioritize two. For example, we can have democracy and national sovereignty, but less globalization -- Rodrik argues that the best example for this is the era of Bretton Woods. Theoretically, we can try to have democracy and globalization, but less national sovereignty, but that certainly is not the direction that the world is going. Rodrik would argue that is a good thing, because the world is too heterogeneous to be governed via global governance. Finally, we can try to have national sovereignty and globalization, but in that case it would come at the expense of democracy. Globalization limits the range of acceptable political and economic policy in a country, and thereby undermines democratic decision making. For example Rodrik writes, joining the WTO comes with expectations, not just on trade tariffs but on what should be considered fair or unfair product or labor standards. In that case, a country would need to make labor market decisions based on what the WTO expects, and not based on what the democratic polity of a country desires. Rodrik argues that, facing these trade-offs, we should prioritize democracy and national sovereignty.
Another line of argument Rodrik made that struck me was that the gains of trade from further trade liberalization are incredibly limited and come with huge redistribution trade-offs. One back of the envelope he conducted suggests that we may need to redistribute by 50 units in order to gain 1 unit of efficiency gain. There are also systemic risks that increase with increased liberalization of capital markets. Instead, Rodrik points out that a valuable policy area we should be looking into is greater liberalization of labor markets, the last global marketplace that remains incredibly protectionist. His argument is essentially that, allowing for more labor migration across countries, especially from poor countries to rich countries, even if it is just a work permit with no path toward permanent residency, could have a much greater development / economic impact. In a global environment today that is increasingly populist and wary of migrants, I wonder when this line of thinking will catch on, if at all. Despite some countries going in the opposite direction, notably the United States, there are some countries like Japan that are easing restrictions and encouraging more migration. This is an area of political economy that I will be paying close attention to in the coming decade.
October 15, 2022
really riveting. the follies of financial globalization. WTO and IMF do not promote equity. Bretton Woods was better. The Foxes vs hedgehogs of finance.
January 5, 2017
Cited as one of the few economics books which predicted the recent upheavals such as the rise of Trump, Sanders and particularly the Brexit vote, Rodrik's Central thesis is what he calls the political trilemma of the world economy - that it is possible to have any two of hyper-globalisation, democracy and national self-determination but not all three. He concludes that global government for now is a largely utopian dream (hence ruling out the dropping of the national state).
He characterises much of politics in the recent Washington consensus years as the golden straight jacket, a model which he also ascribes to the gold standard pre-World War I years and to (in a different guise) the years of mercantilism and imperialism in the 17th and 18th centuries. As a keen fan of democracies he explicitly rejects this model (although not to the extent of its rejection by voters since the book was written) and argues for what he calls the Bretton Woods compromise - a version of the post-World War 2 settlement which he asserts lead to the greatest growth the world has ever seen and still largely is the way in which China engages in globalisation - where some constraints are imposed but where countries are free to impose their own democratic customs in areas such as labour standards, health and safety and consumer protection, the social compact, industrial policy and (in fact an area he actively encourages) in imposing constraints on capital flows.
Much of the book lays the groundwork for this thesis and conclusion and also prevents the author's very firm views on globalisation and on related topics.
These include: a rather naive but firmly expressed view in the importance of economists and their ideas and hence the danger when groupthink ends with them making wrong conclusions as he believes has been the case in their public if not private un-nuanced support for free trade; a view that markets and states are not just not incompatible but that a firm state is essential for the prosperous operation of free-trade, establishing and enforcing rules of conduct to reduce transaction costs, setting up safety nets for those disadvantaged by trade - this in itself leading to the conclusion that successful global trade could only work with global government; a strong argument based on empirical research that contrary to what is assumed to be the case the overall benefits of free trade measures to economies (particularly incremental improvements to free trade given the already fairly open global economy) are dwarfed by the redistribution effects they produce, a situation exacerbated because unlike technological improvements the effects (both positive and negative) tend to be on the same groups of people every time; a damning if not fully argued evaluation of the effects (follies in his view) of financial globalisation - and dangers of free capital flows which have added instability to countries without compensating benefits.
Overall an excellent book, easy to read and coherently argued despite presenting an original view.
The only weak part is the end where the author presents what he calls Capitalism 3.0 (after the mixed state/markets part globalisation consensus of the Bretton Woods years and the globalisation pro-markets view of the years up to the financial crisis) and sets out plans for a sane globalisation. This part becomes rather idealistic and short on detail envisaging a world where opt outs from free trade are permitted where a country can clearly show it reflects the democratic consensus in their country (which he believes will only lead to sensible and justifiable opt outs), where democracies are given preference.
Most idealistically of all (and showing that he was not in fact an economic prophet of Trump and Brexit) he argues that the one area which can unequivocally benefit from greater globalisation is freedom of movement of labour flows by a system of mass temporary work visas.
He characterises much of politics in the recent Washington consensus years as the golden straight jacket, a model which he also ascribes to the gold standard pre-World War I years and to (in a different guise) the years of mercantilism and imperialism in the 17th and 18th centuries. As a keen fan of democracies he explicitly rejects this model (although not to the extent of its rejection by voters since the book was written) and argues for what he calls the Bretton Woods compromise - a version of the post-World War 2 settlement which he asserts lead to the greatest growth the world has ever seen and still largely is the way in which China engages in globalisation - where some constraints are imposed but where countries are free to impose their own democratic customs in areas such as labour standards, health and safety and consumer protection, the social compact, industrial policy and (in fact an area he actively encourages) in imposing constraints on capital flows.
Much of the book lays the groundwork for this thesis and conclusion and also prevents the author's very firm views on globalisation and on related topics.
These include: a rather naive but firmly expressed view in the importance of economists and their ideas and hence the danger when groupthink ends with them making wrong conclusions as he believes has been the case in their public if not private un-nuanced support for free trade; a view that markets and states are not just not incompatible but that a firm state is essential for the prosperous operation of free-trade, establishing and enforcing rules of conduct to reduce transaction costs, setting up safety nets for those disadvantaged by trade - this in itself leading to the conclusion that successful global trade could only work with global government; a strong argument based on empirical research that contrary to what is assumed to be the case the overall benefits of free trade measures to economies (particularly incremental improvements to free trade given the already fairly open global economy) are dwarfed by the redistribution effects they produce, a situation exacerbated because unlike technological improvements the effects (both positive and negative) tend to be on the same groups of people every time; a damning if not fully argued evaluation of the effects (follies in his view) of financial globalisation - and dangers of free capital flows which have added instability to countries without compensating benefits.
Overall an excellent book, easy to read and coherently argued despite presenting an original view.
The only weak part is the end where the author presents what he calls Capitalism 3.0 (after the mixed state/markets part globalisation consensus of the Bretton Woods years and the globalisation pro-markets view of the years up to the financial crisis) and sets out plans for a sane globalisation. This part becomes rather idealistic and short on detail envisaging a world where opt outs from free trade are permitted where a country can clearly show it reflects the democratic consensus in their country (which he believes will only lead to sensible and justifiable opt outs), where democracies are given preference.
Most idealistically of all (and showing that he was not in fact an economic prophet of Trump and Brexit) he argues that the one area which can unequivocally benefit from greater globalisation is freedom of movement of labour flows by a system of mass temporary work visas.
February 15, 2018
In The Globalization Paradox, Rodrik, in time, gets to the argument that pathways to economic development should be country-specific and domestically driven. It is unfortunate he spends the better part of the book in the post-financial-crisis-blame-game muck, admonishing his economist peers for their errors in trade theory previous to the crisis, while self styling himself as one of the few rouges in the profession standing in opposition to this orthodoxy.
His caricature of the (macro) economic profession as a veritable monotheistic religion worshiping at the alter of trade-liberalization is a straw-man to beat down in order hook a general audience into his narrative. Ignoring the diversity of opinion -and diversity evidence regarding the topics of development and trade liberalization under discussion- within the profession, Rodrik only does a disservice to his audience. This caricature reaches the comical level when he admonishes the profession for failing to state their assumptions and caveats when expressing the opinion that trade is, in general, a good thing. He comes close to implying that economists are some sort of cabal who act as gatekeepers on this knowledge, because they feel that releasing it to the general public will fuel protectionist passions. The funny thing is that there are many instances in this book where Rodrik does not state HIS assumptions, including when he cites his own study regarding ratio of redistribution of income to the gains resulting from further liberalization in the US or when invokes the "law of economics" that efficiency loses from taxes rise with the square of the tax restriction. Upon noticing these things one starts to wonder if Rodrik is playing games.
The games don't end there. Many of Rodrik claims -on issues that are contentious and for which a large literature exists within the field- rest on evidence from one study. This, for anyone, should act as a big ol' red flag pointing towards Rodrik picking studies which compliment his narrative, rather than giving an accurate portrayal of the consensus (or lack there of) within the field. This presents as a major deficiency in Rodrik's work, given he is advocating for case by case development. Case by case development requires one to possess knowledge of the variety of empirical results on development policies and macroeconomic phenomena present in the literature, to not know this literature intimately would increase the likelihood of prescribing the wrong policies for a particular case. Further, this does a disservice to the reader, when coming to a book in an attempt to parse out phenmena in the global economy, these readers deserve the whole story. If Rodrik can't make his case given the general state of empirical evidence available, then it is not a case worth making.
This is all very unfortunate, because there is a lot of very compelling material that could have received more attention within this book. His formalization of the Trilemma of globalizaion and how hyper-globalization can erode the ability of nations to enact domestic policy is interesting and important. It is too bad that his wallowing in the muck described above prevented him from even posing the Trilemma until over half way into the text. Perhaps if he had left more room for these ideas to breathe he would have been able to avoid sloppy mistakes in the policy prescriptions he motivates from this idea. Alas, he ends this flawed work with a contradiction: stating that nations, through world trade regimes, should not be able to force their institutions on other nations, while in the next breath stating that these protections should only be extended to democratic nations. It is feasible he could have reconciled this contradiction if he had not spent so much of the text's length on unimportant distraction, but instead he waved his hands at it and was done with the whole affair.
His caricature of the (macro) economic profession as a veritable monotheistic religion worshiping at the alter of trade-liberalization is a straw-man to beat down in order hook a general audience into his narrative. Ignoring the diversity of opinion -and diversity evidence regarding the topics of development and trade liberalization under discussion- within the profession, Rodrik only does a disservice to his audience. This caricature reaches the comical level when he admonishes the profession for failing to state their assumptions and caveats when expressing the opinion that trade is, in general, a good thing. He comes close to implying that economists are some sort of cabal who act as gatekeepers on this knowledge, because they feel that releasing it to the general public will fuel protectionist passions. The funny thing is that there are many instances in this book where Rodrik does not state HIS assumptions, including when he cites his own study regarding ratio of redistribution of income to the gains resulting from further liberalization in the US or when invokes the "law of economics" that efficiency loses from taxes rise with the square of the tax restriction. Upon noticing these things one starts to wonder if Rodrik is playing games.
The games don't end there. Many of Rodrik claims -on issues that are contentious and for which a large literature exists within the field- rest on evidence from one study. This, for anyone, should act as a big ol' red flag pointing towards Rodrik picking studies which compliment his narrative, rather than giving an accurate portrayal of the consensus (or lack there of) within the field. This presents as a major deficiency in Rodrik's work, given he is advocating for case by case development. Case by case development requires one to possess knowledge of the variety of empirical results on development policies and macroeconomic phenomena present in the literature, to not know this literature intimately would increase the likelihood of prescribing the wrong policies for a particular case. Further, this does a disservice to the reader, when coming to a book in an attempt to parse out phenmena in the global economy, these readers deserve the whole story. If Rodrik can't make his case given the general state of empirical evidence available, then it is not a case worth making.
This is all very unfortunate, because there is a lot of very compelling material that could have received more attention within this book. His formalization of the Trilemma of globalizaion and how hyper-globalization can erode the ability of nations to enact domestic policy is interesting and important. It is too bad that his wallowing in the muck described above prevented him from even posing the Trilemma until over half way into the text. Perhaps if he had left more room for these ideas to breathe he would have been able to avoid sloppy mistakes in the policy prescriptions he motivates from this idea. Alas, he ends this flawed work with a contradiction: stating that nations, through world trade regimes, should not be able to force their institutions on other nations, while in the next breath stating that these protections should only be extended to democratic nations. It is feasible he could have reconciled this contradiction if he had not spent so much of the text's length on unimportant distraction, but instead he waved his hands at it and was done with the whole affair.
February 28, 2021
This book is extraordinarily easy to follow, lacks the pricking tones of condescension or absolutism that some economists maintain, and is an overall refreshing dissenting opinion on a more standard macroeconomic stance of the day. There are quite a number of ideas to unpack in the book but the author’s thesis is what he calls the “fundamental trilemma of the world economy”:
“We cannot simultaneously pursue democracy, national determination, and economic globalization.”
The trilemma itself is explained throughout the book and does seem very reasonable. In the years since this book’s publication there have been very clear national determination-focused tendencies emerging throughout the democratic world (numerous populist leaders elected, Brexit, COVID19 lockdowns and fallout, etc.) and these actions and so many others like it seem to point to the existence of the trilemma. To put it another way: as international issues and relationships change, the barriers of nations have not come tumbling; instead the nation continues to emerge as the centerpiece of massive human systems.
The author makes his stance on this trilemma clear throughout the book by statements such as:
“Democracies have the right to protect their social arrangements, and when this right clashes with the requirements of the global economy, it is the latter that should give way.”
Though, at the beginning, I would have considered the author to be closer to the nationalist spectrum, I feel that his view is not as one-sided as the title and thesis of the book may infer. At no point did the author make clearly disingenuous remarks towards globalist theories or practices; in fact, it seems that the author even views hyperglobalization as a worthwhile, humanist end-goal however, the realism of that goal in the near term is undeniably questionable. His arguments about why there will be a continued push-back against globalism were very sound as he repeatedly makes fantastic and realistic points about underlying issues that almost always stem from the degree of representation and (primarily economic) autonomy of nation-states in a globalist system.
Overall, this is one of the most personally influential books I’ve read this year and I fully intend to gift it and re-read it in the next 10 years.
My one takeaway quote:
“Economic growth and development are possible only through the accumulation of capabilities over time, in areas ranging from skills and technologies to public institutions. Globalization on its own does not generate these capabilities; it simply allows nations to leverage better those that they already possess.”
-D. Rodrik
“We cannot simultaneously pursue democracy, national determination, and economic globalization.”
The trilemma itself is explained throughout the book and does seem very reasonable. In the years since this book’s publication there have been very clear national determination-focused tendencies emerging throughout the democratic world (numerous populist leaders elected, Brexit, COVID19 lockdowns and fallout, etc.) and these actions and so many others like it seem to point to the existence of the trilemma. To put it another way: as international issues and relationships change, the barriers of nations have not come tumbling; instead the nation continues to emerge as the centerpiece of massive human systems.
The author makes his stance on this trilemma clear throughout the book by statements such as:
“Democracies have the right to protect their social arrangements, and when this right clashes with the requirements of the global economy, it is the latter that should give way.”
Though, at the beginning, I would have considered the author to be closer to the nationalist spectrum, I feel that his view is not as one-sided as the title and thesis of the book may infer. At no point did the author make clearly disingenuous remarks towards globalist theories or practices; in fact, it seems that the author even views hyperglobalization as a worthwhile, humanist end-goal however, the realism of that goal in the near term is undeniably questionable. His arguments about why there will be a continued push-back against globalism were very sound as he repeatedly makes fantastic and realistic points about underlying issues that almost always stem from the degree of representation and (primarily economic) autonomy of nation-states in a globalist system.
Overall, this is one of the most personally influential books I’ve read this year and I fully intend to gift it and re-read it in the next 10 years.
My one takeaway quote:
“Economic growth and development are possible only through the accumulation of capabilities over time, in areas ranging from skills and technologies to public institutions. Globalization on its own does not generate these capabilities; it simply allows nations to leverage better those that they already possess.”
-D. Rodrik
November 4, 2019
Globalization first reared its tentative head, courtesy a revisionist package popularly known as the "Washington Consensus". The term was coined in 1989 by John Williamson and represented as its edifice three indispensable words: stabilize; liberalize; and privatize. Two and a half decades and a crippling recession later, the world is still coming to grips with the shock and awe impact caused by a rampant globalization that had its most fervent advocates fleeing for life!
In this compelling work, Dani Rodrik demonstrates with sincere zeal the perilous outcomes signifying the impact and encouragement of unfettered and unalloyed globalization. Drawing reference to what he calls the political "trilemma" of the World Economy, Rodrik articulates the difficulty of choosing globalization over democratic preserves and the cohesive building of a nation state. Calling for a balanced approach to free market theory and interventionist measures, the author advocates the embracing of what he terms "sane" globalization, a system whereby national interests are not sacrificed at the alter of undisguised greed.
Cocking a snook at free market mavens, the author takes great pains to demonstrate the pernicious effects of ignoring the power of and the need for a nuanced state intervention. The Invisible Hand of Adam Smith at times has very visible adverse ramifications. Rabid free market proponents such as Jagdish Bhagwati of Columbia University would do well to read this work from cover-to-cover so as to realise their headstrong follies and ill-perceived notions.
"Globalisation Paradox" - A Universal wake-up call!
In this compelling work, Dani Rodrik demonstrates with sincere zeal the perilous outcomes signifying the impact and encouragement of unfettered and unalloyed globalization. Drawing reference to what he calls the political "trilemma" of the World Economy, Rodrik articulates the difficulty of choosing globalization over democratic preserves and the cohesive building of a nation state. Calling for a balanced approach to free market theory and interventionist measures, the author advocates the embracing of what he terms "sane" globalization, a system whereby national interests are not sacrificed at the alter of undisguised greed.
Cocking a snook at free market mavens, the author takes great pains to demonstrate the pernicious effects of ignoring the power of and the need for a nuanced state intervention. The Invisible Hand of Adam Smith at times has very visible adverse ramifications. Rabid free market proponents such as Jagdish Bhagwati of Columbia University would do well to read this work from cover-to-cover so as to realise their headstrong follies and ill-perceived notions.
"Globalisation Paradox" - A Universal wake-up call!
November 26, 2016
"When domestic needs clash with the requirements of the global economy, domestic needs emerge victorious .."
So what is globalization about anyway? In three words: “Minimizing transaction costs”. Trade is accomplished basically in three ways: Long term relationships, belief systems and third party enforcement. You need something to ensure the next guy isn’t going to screw you. Contrary to what we may have thought, globalization didn’t start in the 1980s but rather has been around since steamships and telegraphs. This was followed by the narrative of Adam Smith and David Ricardo and the relaxing of trade restrictions. Rodrik does an admirable job of defining the history in which these major changes came about. From the gold standard, and protectionism to the Reagan/Thatcher years, globalization grinds its way ever forward to GATT and the WTO.
I came to this book, a free market advocate, but having read it and digested its lessons of history, I, like Keynes, am willing to say ""When the facts change, I change my mind. What do you do, sir?”. If we look at the historical facts, as Rodrik suggests, then we can come to only one conclusion. That is, that the success stories of the world such as South Korea, Taiwan, China succeeded in large part in different manners because the problems they were solving were different. It isn’t a one size fits all solution.
International capital markets due to short term speculation can lead to financial panics. For the US, by 2007, $3.2 trillion daily foreign currency transactions are 100x the volume of daily trade ($38 billion). OK, thats nothing to sneeze at. Capital control may be a good thing.
So what is globalization about anyway? In three words: “Minimizing transaction costs”. Trade is accomplished basically in three ways: Long term relationships, belief systems and third party enforcement. You need something to ensure the next guy isn’t going to screw you. Contrary to what we may have thought, globalization didn’t start in the 1980s but rather has been around since steamships and telegraphs. This was followed by the narrative of Adam Smith and David Ricardo and the relaxing of trade restrictions. Rodrik does an admirable job of defining the history in which these major changes came about. From the gold standard, and protectionism to the Reagan/Thatcher years, globalization grinds its way ever forward to GATT and the WTO.
I came to this book, a free market advocate, but having read it and digested its lessons of history, I, like Keynes, am willing to say ""When the facts change, I change my mind. What do you do, sir?”. If we look at the historical facts, as Rodrik suggests, then we can come to only one conclusion. That is, that the success stories of the world such as South Korea, Taiwan, China succeeded in large part in different manners because the problems they were solving were different. It isn’t a one size fits all solution.
International capital markets due to short term speculation can lead to financial panics. For the US, by 2007, $3.2 trillion daily foreign currency transactions are 100x the volume of daily trade ($38 billion). OK, thats nothing to sneeze at. Capital control may be a good thing.
June 30, 2021
The history of globalization presented is a useful backdrop to Rodrick's arguments. Many of the arguments presented were cogent, however the final two chapters revealed inconsistencies in his arguments. Specifically, he has double standards when it comes to the tendency of domestic policies in large economies to coax similar policies out of smaller, dependent economies, even if it's against their interest. If this is done by the U.S. it's simply a case of nations "needing to play by the rules to be in the game", which is an astounding claim in the context of advocating for the benefits of national self-determination. On the other hand, when a similar mechanism emerges from China's domestic policies, it's a danger that needs to be countered by global governance.
Rodrick's doublethink is rooted in his ideological conception of "democracy". A reader should expect the author to define their major terms. The lack of care to do so is especially surprising when (undefined) democracy makes one of the three pillars of his globalization trilemma. That Rodrick treats democracy as a binary state (when, in reality, it's a dubious and amorphic ideal) defeats many of his proposals. The chapter, "Designing Capitalism 3.0" is especially outlandish, despite being founded on good observations about the benefit of diversified national economic policies guided by self-interest as opposed to the international ideology of hyperglobalism.
Overall, this was an accessible read on topics in developmental economics loaded with salient criticism of today's dominant patterns.
Rodrick's doublethink is rooted in his ideological conception of "democracy". A reader should expect the author to define their major terms. The lack of care to do so is especially surprising when (undefined) democracy makes one of the three pillars of his globalization trilemma. That Rodrick treats democracy as a binary state (when, in reality, it's a dubious and amorphic ideal) defeats many of his proposals. The chapter, "Designing Capitalism 3.0" is especially outlandish, despite being founded on good observations about the benefit of diversified national economic policies guided by self-interest as opposed to the international ideology of hyperglobalism.
Overall, this was an accessible read on topics in developmental economics loaded with salient criticism of today's dominant patterns.
April 27, 2018
Rodrik gives a nuanced and well researched argument into why he believes unfettered globalization in its current form doesn't make sense. He presents his argument well and overall, I supported his viewpoint. Most of the chapters in this book are well-written, however,Rodrik's biggest problem is the way in which he attacks other academics(especially fellow economists) and commits a large part of the book into a huge "I told you so". This sort of polemical argument draws away from this central theme, especially his unique realization of the trilemma faced by developing countries today.
September 17, 2016
A highly accessible explanation of the pros and cons of globalization. Readable and chronological, the book explores the history of our increasingly globalized world and why our current questions have been asked throughout time. Importantly, it posits that it is essential that countries maintain their own values while developing a global outlook. No matter what you may feel about globalization, you will have your eyes opened by this pivotal piece. And I recognize that neither the US nor China is a bogeyman in the race to connect.
September 13, 2018
الرأسمالية نظام مرن يتغير ويتكيف مع الظروف والتغيرات وعلى الرغم من عيوبها الكبيرة الا انها النظام الوحيد القابل للتطبيق في هذا العصر والعولمة هي ابتكار من ابتكارات الراسمالية للتوسع وزيادة الثروات ورغم النجاح الباهر الذي تحقق للعولمة في السنوات الماضية الا ان عيوبا قاتلة بدات تظهر في العولمة وهذا ما يناقشه الكتاب كما يقدم حلولا لها ولعل مما يلفت النظر ان الكتاب تم تاليفه قبل تولي الرئيس ترامب الحكم في امريكا ونجد في اخر الكتاب مايشبه التوصيه برفع الرسوم الجمركيه وهذا ما فعله ترامب
April 25, 2015
Political trilemma of the world economy
Can not be achieved at the same time , taking any two can not be achieved one or any remaining
1. " globalization ( international economic integration ) "
2. " national sovereignty ( independence of the state ) ."
3. " democracy ( personal freedom ) "
ref. http://en.wikipedia.org/wiki/Impossib...
Can not be achieved at the same time , taking any two can not be achieved one or any remaining
1. " globalization ( international economic integration ) "
2. " national sovereignty ( independence of the state ) ."
3. " democracy ( personal freedom ) "
ref. http://en.wikipedia.org/wiki/Impossib...
December 20, 2016
It took me more than two months to finish this short-ish book, so I wouldn't call it a pageturner, but it did me teach me a lot about international economics, trade agreements and sovereignty issues. I would recommend it to anyone trying to make sense of the whole CETA-TTIP affair and the current backlash against hyperglobalization.
May 13, 2023
مفهوم العولمة وما يتعلق به من قوانين ومعاهدات وإتفاقيات ومدى تأثير تطبيق العولمة ومناهجها على الكثير من دول العالم.يأتي كل ذلك في إطار من التشويق والتوضيح عن طريق طرح أمثلة من الدول التي طبقت العولمة بحذافيرها وما الذي عاد على تلك الدول من مكاسب وخسائر جراء إعتناقهم لتلك الرؤية وتطبيقها على أرض الواقع.
October 8, 2014
Rodrik presents economic globalization as a trilemma: amongst democracy, high-levels of globalization, and nation states, you can pick any two. And since we're unlikely to see the end of the last, and we don't want to give up the first, globalization in its more extreme forms will have to go.
January 11, 2025
Clear, depictive with serious matters, a joy to read.
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