The Dahrendorf Quandary, Crisis Severity, and Country Performance

Helmut K Anheier,Alexandru Filip

doi:10.1111/1758-5899.12901

Abstract

AbstractDahrendorf´s Quandary, an early formulation of the Rodrik Trilemma, stipulates that maintaining economic competitiveness requires countries either to adopt measures detrimental to the cohesion of civil society, or to restrict civil liberties and political participation. The global financial and economic crisis of 2008–09 offers a test case for the applicability of the Quandary. We do so by examining economic, political and social stressors afflicting countries during the period of 2009–2014 relative to the severity and type of crises they experienced, and the ensuing political consequences for economy policy, democracy and society prevalent in 2019. We find that the Quandary does not apply uniformly across advanced market economies. Instead we detect distinct clusters that vary in their intensity of the tension the Quandary stipulates. We also find a consistent and positive relationship between Quandary intensity and crisis severity, yet obtain inconclusive results when looking at the relationship with current trends. The findings suggest that the crisis preparedness and the actual governance capability of countries to address the negative effects of economic globalization are key to managing the tensions inherent in the Dahrendorf Quandary and the Rodrik Trilemma.

Highlights

Dahrendorfs Quandary, an early formulation of the Rodrik Trilemma, stipulates that maintaining economic competitiveness requires countries either to adopt measures detrimental to the cohesion of civil society, or to restrict civil liberties and political participation
For OECD countries, the task ahead for the early 21st century, he wrote, ‘is to square the circle between growth, social cohesion and political freedom’ (Dahrendorf, 1995, p. 4). This challenge became known as the Dahrendorf Quandary (Anheier and Filip, 2020; Buti and Pichelmann, 2017), an early formulation of the Rodrik Trilemma with a focus on the tensions arising in the context of continuing economic globalization
The analysis addressed three main question: does the Dahrendorf Quandary apply across all developed market economies included here? To what extent have Quandary tensions changed between 2009 and 2014, and what are likely to be the longer-term impacts on economic policy, the state of democracy and society?

Summary

Conclusions

The purpose of this paper was to explore the applicability and generality of the Quandary in the context of the global financial crisis 2008–09. The logic of the argument to test the Quandary was that 1980s market liberalization, the fall of state socialism in 1989–1990 and other developments, led to a significant and rapid expansion of economic globalization across markets and countries This process brought many benefits, at least at the level of aggregate prosperity, and placed significant strains on national economies, political systems and societies. While Dahrendorf seems to assume that societies may be more likely to abandon liberal democracy for the sake of preserving social cohesion, Rodrik seems to lean towards the expectation that countries will roll back globalization in order to maintain the other two elements It is the task for future research to identify the responses and policy measures that countries have employed in order to stem the more acute symptoms of the Quandary and its inherent stresses

Satisfaction with democracy

Findings

Trade taxes