Embedded Liberalism in the Digital Era

Abstract

In recent years, the volume and intensity of attacks on globalization have been steadily rising. It is frequently argued that the anti-globalization backlash stems from strains that have been placed on the compromise of embedded liberalism. We argue that existing research underemphasizes how technological change and the digital revolution have contributed to these strains. Global value chains facilitated by the digital revolution have linked technology in advanced industrial countries to low-cost labor in developing countries, precipitating distributional losses for lowskilled labor in the industrial world. Further, the digital revolution has led to regulatory challenges involving both capital and labor. We argue that, as a result, governments face both mounting opposition to globalization and heightened difficulty supporting the programs and policies necessary to buffer the adverse domestic effects of globalization and maintain support for embedded liberalism.