Populism and Hyper-globalisation: Can Embedded Liberalism Rebalance Globalisation Again?

Abstract

The post-2016 populist wave has induced reflection on the neoliberal globalization, and the return to embedded liberalism has become an attractive solution. However, the current international division of labor and its corresponding constraints on policy autonomy mark a major departure from the global conditions of the post-war period. This article argues that a revival of embedded liberalism would require the state to regulate the pace of economic liberalization and the distribution of income between labor and capital. Furthermore, there are two preconditions for implementing these functions: the capability of the state to control over cross-border capital flows, and to maintain neutrality in arbitrating between the competing claims of labor and capital. However, both of these conditions are unfeasible under neoliberal globalization for two reasons - (i) the deep engagement of national economies in global value chains (GVCs), and (ii) the structurally imbalanced bargaining power between capital and labor. The former has increased national economic stakes in facilitating non-interference in global capital flows, while the latter imbues the state with a policy bias favoring capital’s interest over labor’s. Therefore, attempt at levering the state to restore post-war embedded liberalism is constrained by this collusion of capital and power in hyper-globalization.