book

The Globalization Paradox

21 Pages 1929 Words 1557 Views

In today’s era we have already experienced globalization economic collapse, such as the great financial crisis of 2008 that brought down Wall Street. Now, serious doubts have been raised about the sustainability of global capitalism. As a result, questions about whether or not we will experience another global economic breakdown in years to come are a hot topic. However, in the book The Globalization Paradox: Democracy and the Future of the World Economy by Dani Rodrik, he offers an alternative narrative based on two simple ideas to shape the next stage of globalization. First, “markets and governments are complements, not substitutes. If you want more and better markets, you have to have more (and better) governance. Markets work best not where states are weakest, but where they are strong.”1 Second, “capitalism does not come with a unique model. Economic prosperity and stability can be achieved through different combinations of institutional arrangements in labor markets, finance, corporate governance, social welfare, and other areas.”2 Thus, Rodrik’s central argument is that democracy and national determination should triumph hyperglobalization. In this paper I will analyze five main points and arguments that Rodrik has made that encompass his two simple ideas and central argument to shape the next stage of globalization. I will also compare his arguments with that of scholarly authors. Rodrik begins his arguments by focusing on “Trade in Politicized World” by drawing a comparison between the Bretton Woods model, General Agreement on Tariffs and Trade (GATT), and the World Trade Organization (WTO). His argument characterizes the successes of the Bretton Woods model, which eventually became the GATT. The GATT was able to become in effect the multilateral forum overseeing global trade liberalization managed by a small secretariat in Geneva.3 Rodrik argues that it was a roaring success because it was a limited institution whose goal was moderate globalization. However, he does make note that the enforcement powers of the GATT could not be taken seriously. Yet, the author notes “GATT’s purpose was never to maximize free trade. It was to achieve the maximum amount of trade compatible with different nations doing their own thing. In that respect the institution proved spectacularly successful.4 Conversely, Rodrik argues that the WTO tried to improve upon the shortcomings of the GATT, thus marking a new era of globalization termed hyperglobalization. This introduced a new system of global rules, in which the WTO served as the judicial body. He also argues that the WTO domestic regulations and rules create problems between the global markets economy and the national democracy. For example, Susan Esserman and Robert Howse conclude in the book, The WTO on Trial, that “Critics accuse the WTO’s appellate tribunal of improper judicial activism, much as conservative American jurists lambasted the U.S. Supreme Court in the 1960’s and 1970’s.”5 However, Esserman and Howse also make note that the system provides each member country with equal rights and obligations to accept the results.6 Yet, overall Rodrik argues that the WTO overextends international economic integration. The second main argument that Rodrik focuses on is how hyperglobalization impinges on democratic choices and the issue industrial policies in developing nations. “Probably the most significant external constraint that developing nations face as a consequence of hyperglobalization are the restrictions on industrial policies that make it harder for countries in Latin America, Africa, and elsewhere to emulate the development strategies that East Asian countries have employed to such good effect.7 For example, the WTO allows countries to

Read Full Essay