The paradox of globalization

In 2011, Rodrick’s book, The Paradox of Globalization , was published . Democracy and the future of the world economy ”, dedicated to the analysis of the causes and sources of the paradox postulated by the author. He considers his quintessential conflict between the democratic system of government, the prospective integration of the economies of individual states into the world economy (hyperglobalization in the concept of Rodrick) and sovereignty, especially with regard to economic and social policies .

According to Rodrick, there is a globalization trilemma , formulated by analogy with the international finance trilemma ^[1] : no more than two of the above-mentioned political goals can be combined, which is still not addressed in the discourse of globalization. He argues that hyperglobalization is possible only if one or another form of world government is created (global federalism), or democracy is rejected in individual states in favor of a technocratic elite that will adapt its policy to the requirements of the world market (and not to the expectations of citizens). Rodrik believes that the first option is not realistic, and the second is unacceptable for moral reasons, and it remains to abandon hyperglobalization in favor of a system similar to Bretton Woods . According to Rodrik, such a system will allow sovereign, democratic countries to take advantage of the world market within the framework of certain international principles of its work.

In the last chapter of his book entitled Healthy Globalization , Rodrick proposed an international project for an economic system that avoids the triple of globalization. Proposed reform includes:

• amending WTO rules so that member states have more freedom in managing their national economies (for example, allowing certain forms of protectionism to protect national markets or direct industry development in a certain way);
• the introduction of regulation of global financial markets (for example, Tobin tax );
• allowing free (compared with the current situation - Rodrik does not exclude certain restrictions) movement of labor between countries;
• Perception of developing countries as full economic partners.

According to Rodrick, the first attempt to control the first globalization was made before the First World War in the form of a “ gold standard ”. Rodrick calls this approach a “golden straitjacket, ” since it severely limits the ability of national governments to develop the economy. For example, in the 1930s, when Great Britain tried to return to the gold standard, it turned out that the restriction policy was unpopular with voters. Thus, the gold standard, allowing for the sovereignty and freedom of movement of goods and capital, is in conflict with democracy. According to Rodrick, the eurozone fell into the same trap: the internal globalization of commodity and capital markets with the preservation of sovereignty led to the “golden straitjacket” policy imposed by Brussels and Berlin, which creates social friction; according to Rodrick, the eurozone countries today hold together fear of the unknown; he believed in 2013 ^[2] that for Greece and Spain, leaving the eurozone would be a lesser evil.

As a second example, Rodrick cites the Bretton Woods system , which did not limit democracy and sovereignty (assuming, in particular, welfare states ), but at the cost of restricting globalization in the form of limited freedom of trade and tight control over the movement of capital. Rodrik notes that after the collapse of the Bretton Woods system, successful states (for example, China ) are characterized by the fact that they retained more features of this system, and did not pursue full openness within the WTO . In public speeches, Rodrick extends the classic example of M. Friedman with the production of pencils (the production of such a simple product today requires the cooperation of many people and countries), indicating that most of the pencils today are produced in China, not only because the market decided so, but in large part because the Chinese government decided this way (by providing government funding and subsidies and controlling the movement of capital) ^[2] .

As a third, hypothetical, example, Rodrick suggests "global federalism": a world government with its apparent lack of national sovereignty and a possible danger to democracy.

• The Feldstein Paradox - Horioki
• Sustainable development

• Rodrick D. The Paradox of Globalization. Democracy and the Future of the World Economy = The Globalization Paradox: Democracy and the Future of the World Economy. - M .: Publishing house of the Gaidar Institute , 2014 .-- 576 p. - ISBN 978-5-93255-388-6 . ( excerpt )
• Stephen Smith. Book Review: “The Globalization Paradox. Democracy and the Future of the World Economy ”by Rodrik Dani. // Global Journal of Economics (GJE), 2013, vol. 02, issue 02, pages 1380006-1-1380006-3. (eng.)
• The Globalization Paradox. A discussion with Professor Dani Rodrik . Schroders, July 2013. (eng.)