Trade Globalization, Economic Performance, and Social Protection: Nineteenth-Century British Laissez-Faire and Post–World War II U.S.-Embedded Liberalism

Abstract

How have market and state shaped the long-term coevolution of economic performance and social protection during the nineteenth century and post–World War II waves of globalization associated with British laissez-faire liberalism and U.S.-embedded liberalism? Under the impulse of seemingly ever-intensifying globalization, this question is emerging at the core of a novel body of political economy research that seeks to compare the two waves of globalization to draw useful lessons from the past. This research also reflects the concerns recently voiced by neoliberals and neointerventionists about the long-term stability and viability of post–World War II embedded liberalism. Satisfactory investigations of how market and state shape the long-term coevolution of economic performance and social protection in the two regimes remain lacking. Cointegration analyses of the two hegemonic powers that shaped the evolution of the two regimes—nineteenth-century Great Britain and post–World War II United States—demonstrate that the complementarity of market and state in embedded liberalism is associated with better long-term economic performance and social protection.I thank the following people for their help and support in developing this project: Katarina Juselius, Soren Johansen, Mike Artis, Ilijan Georgiev, Suzanne Perry, Ed Mansfield, Dennis Quinn, Lars-Erik Cederman, Ron Jepperson, Mark Kesselman, Luis Moreno, Martin Rhodes, Benedicta Marzinotto, Ron King, David Clinton, and the participants in the Nordic Project funded by the Danish Social Sciences Research Council. Two anonymous reviewers provided valuable suggestions. A Jean Monnet Fellowship from the Robert Schuman Center for Advanced Studies at the European University Institute provided financial support for the project. Any errors are my own.