BOOK REVIEW: "The Globalization Paradox. Democracy and the Future of the World Economy" by Rodrik Dani

Abstract

Dani Rodrik will be well known to readers of this journal. From his perch as professor of international political economy at Harvard’s JFK School of Government, his prolific and often contrarian voice has been prominent in international economics debates for several decades. Therefore many of the arguments in this book — such as his worry that economists oversell the benefits of trade liberalization, or his belief that there are potentially many types of successful democratic– capitalist societies — are familiar from previous writing. But in this book Rodrik pulls the strands of his work into a larger argument about the nature and institutions of globalization. Succinctly put, he argues that the present post-Bretton Woods era, particularly since the establishment of the WTO, represents the triumph of “hyperglobalization” (or “deep integration”) in which “economic globalization has become an end in itself” (xvii). But it is unsustainable. Hyperglobalization, in which trade agreements require countries to constrain domestic economic policy choices on subsidies and industrial policy, and which insists that capital controls be removed and global capital markets deregulated, is a threat to democracy. When the impulses of the international system conflict with the dictates of democratic governance, it is the former that should and will usually give way, not the latter. Therefore, he argues, a more sustainable globalization will (paradoxically) be one which is less insistent on free trade and free markets everywhere all the time. The heart of the book is his discussion of the “political trilemma” of the global economy (Chapter 9). Clearly modeled after the textbook international finance trilemma, he puts it this way: “. . .we cannot have hyperglobalization, democracy, Global Journal of Economics Vol. 2, No. 2 (June 2013) 1380006 (3 pages) © World Scientific Publishing Company DOI: 10.1142/S2251361213800062